How to Get Approved for Vape Shop Payment Processing

Getting approved for payment processing as a vape shop in the US can be challenging because the industry is labeled high-risk by banks and payment processors. Vape and e-cigarette businesses face extra scrutiny due to strict regulations, age restrictions, and higher chargeback risks.

In this updated 2025 guide, we’ll explain why vape shops are high-risk, how to choose a suitable payment processor (including options like Square and specialized high-risk providers), what documentation and underwriting requirements to expect, tips to reduce risk and improve your approval chances, and typical fees for high-risk merchant accounts.

We’ll also cover some FAQs and conclude with key takeaways to help your vape business secure a reliable payment processing solution.

Understanding the High-Risk Status of Vape Shops

Vape shops (including e-cigarette retailers, online vape juice sellers, etc.) are considered high-risk merchants by payment processors and banks. But what does “high-risk” mean, and why are vape businesses put in this category?

• Regulatory Scrutiny & Age Restrictions: The vape industry is heavily regulated. Federal law prohibits selling vape products to minors (the minimum age is 21 in the US). The FDA treats vaping products as tobacco products, imposing strict rules on labeling, health warnings, and even requiring new products to get FDA approval as of 2024.
  
  These constantly evolving regulations mean there’s a risk of legal issues or sudden changes that processors worry about. If a vape merchant isn’t following FDA rules and age-verification laws, it could lead to fines or legal trouble that put transactions at risk.
  
• High Chargeback Rates: Vape and e-cigarette sales tend to have higher incidences of chargebacks and fraud than average retail. Reasons include the online nature of many sales, customer disputes over product satisfaction or health concerns, and the fact that some banks/card issuers scrutinize vape transactions.
  
  High chargeback ratios are a big red flag for processors, as chargebacks not only incur fees but can lead to losses. High-risk industries often face increased chargeback fees and even volume caps on processing because of this.
  
• Product Liability & Health Concerns: Vaping products carry potential health risks, and there have been cases of defective devices causing injury. This raises the specter of liability. If something goes wrong (e.g., a product defect causing harm), customers might initiate disputes or lawsuits. Product liability issues make banks nervous.
  
  Moreover, the long-term health effects of vaping are still being studied, adding uncertainty. Payment providers sometimes lump vape businesses in with other “vice” or health-risk industries that historically see more complications.
  
• Public Perception & Regulatory Risk: Negative media coverage and public health campaigns about vaping (for example, concerns over teen vaping or vaping illnesses) have contributed to a cautious approach by financial institutions.
  
  Public perception can drive stricter regulations. For instance, shipping vape products became more restricted in recent years, and card networks might impose special rules. All these factors increase the risk profile of the industry in the eyes of underwriters.
  
• Why High-Risk Matters: If your business is deemed high-risk, mainstream payment processors often won’t work with you. Traditional processors prefer to avoid the extra risk of fines, fraud, or account losses. In fact, many popular payment services explicitly prohibit vape and tobacco product sales under their acceptable use policies.
  
  This means that if you try to use a normal payment service without disclosure, you risk having your account suddenly shut down and funds frozen once they discover the nature of your business. High-risk merchants instead need to seek out specialized solutions.

In summary, vape shops are high-risk because of legal and financial risk factors beyond those of a typical business. Processors protect themselves by either declining these businesses or imposing stricter requirements (e.g. reserves and higher fees). Understanding this designation is the first step to finding a payment processing solution that works for your shop.

Payment Processing Options for Vape Shops in the US

Because of the high-risk label, choosing the right payment processor is crucial. You generally have two routes: attempt to use a mainstream processor (with significant limitations), or obtain a high-risk merchant account through a provider that specializes in vape or other high-risk industries. Let’s explore both, including Square and other popular services, and why a high-risk specialist is usually the way to go.

Mainstream Providers (Square, PayPal, Stripe) – Limitations for Vape Sales

Services like Square, PayPal, Stripe (and similar payment service providers) are popular for small businesses due to easy sign-up and low fees. However, for vape shops, these are typically not viable in the long run:

• Strict Acceptable Use Policies: PayPal, Stripe, and others ban most tobacco or nicotine product sales on their platforms. For example, PayPal explicitly prohibits transactions for tobacco products, including e-cigarettes, in its Acceptable Use Policy (leading to account bans if violated). Stripe similarly lists vape products as restricted.
  
  Even if you sign up and get started, once the system flags your business type, you could face an abrupt shutdown. These policies often aren’t obvious upfront, so many vape merchants have been caught off guard when their funds get frozen.
  
• Square’s Partial Support (In-Person Only): Square is somewhat unique in that it does allow in-person sales of age-restricted products like cigars or vape devices at a physical store, but does NOT allow online sales of those products. Square’s terms list “internet/mail order/telephone order of age-restricted products (e.g., tobacco)” as prohibited.
  
  This means a vape shop with a brick-and-mortar location could potentially use Square POS for swipe or chip card transactions in-store (where you check customer ID on the spot). However, you cannot use Square’s online store or payment links to sell vape items online. If you try to do so (or use Square for phone/mail orders), you violate their terms and risk account termination. In short, Square might work for a physical vape retail shop for in-person payments, but it’s not a solution for e-commerce or recurring billing for vape products.
  
• Risk of Account Freezes: Even if a mainstream platform doesn’t immediately flag your account, any chargeback or review could lead to closer inspection and a freeze. Merchants have reported accounts being frozen by PayPal or others once volume grows or keywords trigger a review.
  
  The headache and business disruption from a frozen account (where your money is held for months) can be severe. This is why experts do not recommend using PayPal, Square, or Stripe for e-cigarette or vape sales in most cases – the risk is simply too high.
  
• Higher Fees for “Gray Area” Products: It’s worth noting that even when mainstream processors dip into high-risk categories, they often charge higher fees. For example, Square has a special program for CBD products (a similarly regulated industry) with higher processing rates than standard. If a mainstream provider ever offers a vape-friendly option, expect inflated pricing and strict rules. Currently, though, mainstream options for vape shops are very limited.

Bottom line: If you only sell in a physical store, you might use Square for the convenience of a card reader – but proceed with caution and know its limits. For any online vape sales, recurring subscriptions, or simply to avoid surprise shutdowns, you should look at a high-risk merchant account instead.

High-Risk Merchant Account Providers (Vape-Friendly Processors)

Most vape businesses will need a high-risk merchant account through a provider that understands the vape industry. These are sometimes called high-risk payment processors or vape-friendly merchant services. Here’s what that means and how to choose one:

• Willing to Work with Vape Industry: High-risk merchant account providers specialize in industries that mainstream processors shy away from. They partner with acquiring banks that are comfortable underwriting businesses like vape shops, CBD vendors, adult industries, etc.
  
  In other words, they expect the higher risk and have measures to manage it, rather than simply rejecting the business. By going straight to a high-risk specialist, you greatly increase your approval chances – some boast approval rates near 99% for businesses that were declined elsewhere.
  
• Examples of Vape-Friendly Processors: In the US, several reputable companies offer merchant accounts for vape and e-cigarette businesses. Host Merchant Services has options suited for high-volume vape retailers.
  
• Integration and Services: A good high-risk provider will set you up with both a merchant account (the bank account that processes cards) and a payment gateway compatible with your sales channels. Many vape-friendly processors use Authorize.Net or NMI as the gateway, which can integrate with common eCommerce platforms (Shopify, Magento, WooCommerce, etc.).
  
  This means you can still use popular shopping cart software, just plugging in the credentials from your high-risk processor instead of, say, Stripe. Some providers even sync with point-of-sale systems – for example, you could keep using Square for in-person sales but use Authorize.Net with a high-risk backend for your website, and sync inventory between the two systems.
  
• Specialized Support and Tools: High-risk processors often offer extra support such as fraud detection, chargeback prevention, and PCI compliance guidance. They know that keeping chargebacks low is critical, so they may provide services like chargeback alerts or help you set up a solid refund policy.
  
  They also stay up-to-date on industry developments. For example, if new FDA regulations or age-verification laws come out, a vape-specialist processor will understand how that impacts your payments. According to eMerchantBroker, partnering with a high-risk provider means you get a team that is more likely to be “up-to-date with all of the regulations and legislation” for vaping products.
  
• Trade-Offs (Fees and Requirements): The downside of high-risk merchant accounts is cost (we cover pricing in detail below) and sometimes complexity. The application process will be more involved than signing up for Square. You’ll need to provide documentation and undergo underwriting. The provider might impose a rolling reserve (holding a percentage of your sales) especially initially.
  
  There may be a contract term. These are the price of doing business in a higher risk arena. The good news is, if you work with a reputable high-risk processor, you’ll have a stable way to accept payments without lying about your business type or constantly fearing an account freeze.

Tip: Don’t be afraid to apply to multiple high-risk processors or consult with them to compare offers. Applying does not obligate you, and it can be useful to see who offers the best rates or terms for your specific situation. Many will give you a free quote.

Also, engage with providers that talk about vape or tobacco specialization on their website – this usually means their underwriting banks have accepted others in that industry. Some companies can get you set up within a few days if your paperwork is in order – for example, PayKings advertises high-risk account approvals in as little as 48 hours for vape businesses.

Documentation Requirements for Vape Shop Merchant Account Approval

One key to getting approved is preparing a thorough application with all required documentation. High-risk merchant accounts involve more paperwork than a standard payment service. Here are the typical documentation requirements and information you should gather before applying:

• Business Legal Documents: You will need to prove your business is legitimate and properly registered. Expect to provide Articles of Incorporation/Organization or other proof of business entity, your Employer Identification Number (EIN) confirmation (from the IRS), and any business licenses.
  
  For a vape shop, a relevant license could include a state tobacco retail license or vaping product sales permit if your state/locality issues one. Providing your business license and incorporation papers shows underwriters you are a real, compliant business.
  
• Owner/Officer Identification: High-risk processors will verify who is behind the business. You should prepare a copy of the driver’s license or passport for the owner or principal officer, and sometimes a short owner biography or resume is requested (to understand your business experience).
  
  The underwriters may also run a personal credit check on the owners, so be aware of that. A stronger personal credit score can help if your business is new, as it indicates trustworthiness.
  
• Financial Statements & Bank Statements: Underwriters will closely examine your financial health. They typically ask for the last 3–6 months of business bank account statements. They’ll look at balances, any overdrafts, and general cash flow. Additionally, if available, provide recent profit & loss statements or balance sheets for your business.
  
  If you’re a new business with no financials yet, be prepared to demonstrate you have sufficient capital or funding to sustain the business. Processors want to ensure you won’t go bankrupt or run off with funds – healthy bank statements (with decent balances, no constant overdrafts) and clear financials make approval easier.
  
• Past Processing History: If you have previously accepted credit cards (perhaps with another provider), you’ll be asked for processing statements for the last 3–6 months. These statements show your monthly sales volumes, average transaction sizes, and chargeback ratios. Underwriters love to see a low chargeback rate (under 1% of transactions ideally).
  
  If your chargeback rate was higher, include an explanation (more on that in the next section). If you don’t have prior processing history (e.g., you’re opening a brand new shop), that’s okay – high-risk providers work with startups too, but they might start you at a lower volume cap. In lieu of processing records, a projected sales volume and a solid business plan will be needed.
  
• Detailed Product Information: Be ready to describe what exactly you sell. On the application you’ll specify your Merchant Category Code (MCC) – for vape shops, this helps classify you correctly as a tobacco-related product seller. You should provide details on whether you sell devices, e-liquids (with nicotine or without), accessories, CBD products, etc. If you mix your own e-liquids or manufacture anything, that’s relevant too.
  
  Providing a complete list of products (or linking to your website catalog) is important. Processors want to ensure everything you sell is legal and doesn’t stray into other banned categories. For example, clarify that you sell nicotine vape juice but no cannabis/THC products, if that’s the case – since selling marijuana remains federally illegal and would require a different solution entirely. Also note if you sell any non-vape items (e.g., apparel) – probably not an issue, but full transparency is best.
  
• Website and Marketing Review: High-risk underwriters will examine your website if you have one. Before you apply, make sure your website is complete and compliant. It should have an easy-to-find terms and conditions, refund policy, privacy policy, and contact information. If you sell online, implement an age verification popup or process on your site (e.g., “You must be 21 or older to enter – enter birthdate”) and state that you don’t sell to minors. Ensure your product pages have the required nicotine warning labels (e.g., “This product contains nicotine.
  
  Nicotine is an addictive chemical.”) as per FDA regulations. Having these elements in place shows the underwriter that you are a compliant operator. They may even ask for screenshots or descriptions of your age-verification and shipping processes to ensure you follow the law (for instance, adult signature upon delivery if shipping vape products). Also, avoid any banned imagery or claims on your site – for example, do not advertise health benefits, and do not use any images suggestive of marijuana if you’re only selling nicotine vapes.
  
• Operational Documents: Some providers might request additional documents to verify your operations. This can include your supply chain or supplier info (to ensure you’re sourcing products legitimately), inventory reports if you have significant stock, or proof of insurance (like product liability insurance). While not always required, being ready to furnish these if asked can speed up underwriting.
  
  Processors ultimately want to know that you run a real, stable business that won’t suddenly collapse or get shut down by regulators. Any documentation that establishes your credibility and stability can be a plus. For example, if you have storefront leases or photos of your retail location, that can help demonstrate permanence.
  
• Completed Application & Attestations: Finally, the merchant account application form itself must be filled out completely and accurately. Double-check all details before submitting. If there is a question about whether you ever had a merchant account terminated, answer honestly (hiding such info can lead to denial later when they find out).
  
  You may also have to sign an attestation or accept a site inspection (sometimes they’ll do a quick call or visit if you have a physical store to verify you are who you say). Be prepared to also provide a voided business check or bank letter to confirm the bank account where deposits will go – this is standard for setting up the ACH deposits of your credit card sales.

By gathering all these documents and information ahead of time, you’ll make the application process much smoother. A complete, well-organized application package not only speeds up underwriting but also gives the impression that you’re a serious and transparent business, which can improve your approval odds.

Navigating the Underwriting Process & Tips to Improve Approval Odds

Once you submit your application for a vape shop merchant account, it goes into underwriting – essentially a risk review by the acquiring bank or payment processor’s risk department. High-risk underwriting is more thorough than for a typical low-risk merchant, but you can take steps to navigate this process successfully:

• Expect a Rigorous Review: Don’t be surprised if underwriting feels intrusive. They will verify your documents, possibly ask follow-up questions, and evaluate the risk factors of your business. High-risk merchants often undergo “detailed documentation requirements, extended background checks and underwriting procedures”, sometimes even multiple rounds of review.
  
  This is normal. Respond promptly and fully to any requests from the underwriter. If they ask for an explanation or an additional document, provide it quickly. Delays in providing info can slow or jeopardize your approval.
  
• Demonstrate Financial Stability: Underwriters look for financially sound businesses that won’t go under and leave a trail of chargebacks. To improve your profile, maintain a healthy balance in your business bank account (avoid low or negative balances).
  
  If you have outstanding business debt, be ready to explain how you’re managing it. One key tip is to highlight a solid financial track record – for example, if your bank statements show consistent revenue and responsible cash management, that’s a plus. If you’re a newer business, even showing personal financial strength (like decent personal credit and some savings or capital) can help reassure them that you have a cushion to handle refunds or slow periods.
  
• Be Transparent About Chargebacks or Issues: If you had a prior merchant account with some chargebacks, proactively explain what happened and what you’ve done to fix the issue】. Underwriters appreciate honesty. For instance, you might write a brief letter explaining that a spike in chargebacks last year was due to a shipping delay issue which you have since resolved by changing carriers and improving customer communication.
  
  Provide evidence if you have it (like improved chargeback reports). Being upfront and showing you have learned from past issues can “make you appear more transparent, which goes a long way for high-risk merchants”. The worst thing is to hide problems – they often come out in underwriting anyway.
  
• Show Compliance with All Laws: This point cannot be overstated for vape businesses – demonstrate that you know and follow the rules. Underwriters will check if you’re compliant with FDA and state regulations. Make it clear that you do not sell to minors (and how you prevent it), that you adhere to the tobacco 21 law, and that your products meet guidelines (e.g., no banned flavors if any flavor bans in your area, etc.).
  
  If you only sell certain products (like devices and zero-nicotine liquid, for example), clarify that too. The Merchant Maverick guide recommends strictly abiding by FDA rules & regulations and even double-checking that nothing about your marketing or product lineup could be construed as illegal (for example, no devices intended for cannabis use).
  
  Ensuring full compliance reduces the perceived risk in underwriting. It can help to mention any compliance measures you’ve taken – for instance: “We require adult ID verification upon delivery for online sales”, or “All our products have the required warning labels and we do not offer free samples per FDA guidance”. These details show you’re a responsible merchant.
  
• Strengthen Your Policies to Prevent Chargebacks: Underwriters like to see that you are proactively preventing future problems. Two big causes of chargebacks are customer confusion and dissatisfaction. Mitigate these by having clear, customer-friendly return and refund policies, and displaying them clearly on your website or receipts. For online sales, use delivery confirmation and adult signature for shipments to avoid “item not received” claims by underage persons or fraudsters.
  
  Train your staff to handle customer issues promptly so they don’t resort to chargebacks. By implementing such best practices, you can truthfully say to the underwriter that you have systems in place to minimize chargebacks and fraud. Some processors might even ask for your refund/chargeback policy in writing – so it’s good to have a document or webpage ready (e.g., “Customers can return unused products within 30 days for a refund minus shipping; we do not accept returns on opened e-liquid bottles for safety reasons, but we provide store credit” – whatever your policy is, make it reasonable and clearly communicated).
  
• Avoid Prohibited Items or Ambiguity: As mentioned, make sure you aren’t accidentally offering anything that the processor truly cannot accept. For example, if you also sell glass pipes or accessories that could be used for illegal drugs, be cautious – some underwriters might conflate a vape shop with a “head shop.” If you do sell such items, clarify they are for tobacco use only.
  
  If you sell vape products that contain CBD or other hemp derivatives, that’s another layer of risk (CBD is high-risk too, though Square has a program for it). You may need a separate merchant account for CBD products, or ensure your vape account provider knows you sell CBD. Clarity is key – you don’t want the underwriter or their bank to get spooked thinking you’re doing something illegal or outside of what you disclosed. Provide full disclosure of all product categories to avoid surprises during their review.
  
• Prepare for a Possible Reserve or Lower Limits: High-risk accounts commonly come with a rolling reserve – for example, the processor might hold 10% of your transaction volume for 6 months as a security buffer. This is especially likely if you are a new business or have thin credit. Understand that this is not a personal slight; it’s an industry-standard way to manage risk. You likely cannot avoid it, so it’s best to accept it as a condition rather than fight it.
  
  Plan your cash flow accordingly (i.e., you won’t have access to that reserved portion immediately). Over time, if you establish a good history (say after 6-12 months with low chargebacks), you can request the reserve be lifted or reduced. Similarly, you might get an initial processing volume cap – e.g., you’re approved to process up to $50,000 a month.
  
  If you approach that limit, you’ll need to ask for an increase. The best tip here is to start with realistic expectations: don’t overstate your volume on the application (thinking it makes you look good). Be truthful or slightly conservative; this makes it easier to stay within limits. You can always scale up later once trust is built.
  
• Use Multiple Accounts if Needed: This tip is more for established businesses: Some high-risk merchants spread transactions across more than one merchant account to mitigate risk – a practice called load balancing. For example, a large online vape retailer might have two merchant accounts and route, say, 50% of transactions through each.
  
  This way, if one account faces an issue or reaches a volume cap, the other can handle overflow, and the business isn’t completely shut down. This is an advanced strategy and requires coordination (usually via a payment gateway that supports multiple MIDs), but it’s something to keep in mind as you grow. In the beginning, focus on getting one good account approved; later, adding a second for redundancy can be wise in high-risk industries.

In essence, the underwriting process for a vape merchant account is about convincing the processor that you are a compliant, financially stable, and proactive business owner despite being in a risky industry. By preparing strong documentation, being transparent about risks, and implementing measures to mitigate those risks, you significantly boost your chances of approval.

Many vape shop owners do successfully obtain merchant accounts by following these guidelines – it may take a bit more effort and patience, but it’s achievable.

High-Risk Merchant Account Fees and Pricing for Vape Shops

One trade-off with high-risk payment processing is that it costs more than standard payment processing. It’s important to know what fees and rates to expect so you can price your products and budget accordingly. Below is an overview of typical fee structures for high-risk merchant accounts (like those used for vape businesses):

• Account Setup Fees: Some high-risk merchant account providers advertise $0 application or setup fees, but others may charge a one-time setup fee due to the extra work in underwriting. This can vary widely. In some cases, setup fees can run up to $500-$1,000 or more for very high-risk accounts. Many providers will try to waive this to be competitive, so always ask.
  
  Also, note that Visa and Mastercard have something called a High-Risk Registration fee for certain industries (historically around $500 for Mastercard and $950 for Visa annually). Not all vape businesses trigger this – it’s usually for predefined categories like online pharmacies, etc. – but if it does apply, the processor will pass that through to you at onboarding or annually. It’s worth asking your provider if any network registration fees apply to your account.
  
• Monthly Fees: Almost all high-risk merchant accounts will have a monthly maintenance fee or account fee. This typically ranges from about $10 up to $50 per month for vape businesses. This fee covers the cost of keeping your account active, customer support, and often includes the payment gateway fee.
  
  (For instance, a provider might charge $20/month and include the Authorize.Net gateway in that. If not, a separate gateway fee of ~$25 could apply, but usually they bundle it.) By contrast, many low-risk processors have no monthly fee – but in high-risk, expect one.
  
• Transaction Processing Rates: This is the percentage of each sale that you pay as a processing fee (also known as the discount rate). For high-risk merchants like vape shops, the rate will be higher than the standard ~2.9% you see with Stripe or Square. Typical high-risk processing rates range roughly from about 3.5% up to 7% in many cases, depending on your risk profile.
  
  Some merchants with excellent credentials might get slightly under 4%, whereas riskier or newer ones might be quoted 6% or higher. In extreme cases (very high risk or international transactions), rates can even approach 10%, but that’s not common for a straightforward vape shop. According to industry sources, high-risk businesses often pay 0.5% to 1% higher than low-risk – since low-risk e-commerce is ~3.5%, that puts high-risk in roughly the 4%–5% (plus $0.25) per transaction range for many merchants.
  
  Remember that this rate usually already includes the interchange (Visa/Mastercard) fees; the provider isn’t adding it on top of standard rates, rather they are giving you a bundled rate that accounts for the higher risk. Always clarify if your quoted rate is a flat rate or “interchange-plus.” Many high-risk accounts might actually be interchange plus, e.g., Interchange + 1%. That could average out to around the ranges discussed. For simplicity, just compare the effective rate.
  
• Per-Transaction Fee: In addition to the percentage, there’s often a small authorization fee for each transaction, commonly around $0.20 to $0.30. For example, an offer might be “4.95% + $0.30 per transaction.” Some providers may go a bit higher on this fixed fee for high-risk, like $0.50, but generally it’s in line with typical gateway fees. This might be negotiable if your average ticket size is large (since $0.30 on a $100 sale is negligible, but on a $5 sale it’s more noticeable).
  
• Chargeback Fees: If a customer disputes a charge and it becomes a chargeback, you will pay a chargeback fee. This is separate from losing the sale amount. For high-risk accounts, chargeback fees are usually higher than for low-risk. Expect around $25–$45 per chargeback on average. Some providers may charge even more (up to $75 or $100) for certain high-risk verticals.
  
  Processors charge this to cover the administrative cost of handling the dispute (and as an incentive for you to keep chargebacks low). Additionally, if your chargeback rate gets too high, you could face penalty fees or account termination. High-risk processors might offer chargeback alert programs or mitigation services – those could cost extra but might be worth it if you’re struggling with disputes.
  
• Rolling Reserve: As discussed in the underwriting section, many high-risk merchant accounts come with a rolling reserve requirement. A typical reserve might be 10% of each transaction held for 6 months. The range is often anywhere from 5% up to 15% held for 3-6 months. For example, with a 5% 6-month rolling reserve: if you processed $10,000 in January, $500 is set aside and would be released in July (assuming no issues), on top of whatever is reserved from February rolling to August, and so on.
  
  This means at any given time, a few months of reserve are accumulating/releases in a cycle. Not all accounts have a reserve, but it is very common for new vape businesses until you establish a clean history. When comparing providers, look at the reserve terms – some might offer 5% for 3 months, which is more lenient, while others do 10% for 6 months. It affects your cash flow, so it’s an important part of the “cost.”
  
• Ancillary Fees: There can be a few miscellaneous fees. One is a monthly minimum fee – e.g., if your fees for the month don’t reach a certain amount, they charge the difference. For instance, a $25 monthly minimum: if your % fees totaled only $15 in a slow month, they’d charge an extra $10. This isn’t usually an issue if you’re actively processing since you’ll meet the minimum.
  
  Another fee is PCI Compliance fee – some providers charge an annual or monthly fee (maybe ~$100/year or $10/month) for PCI compliance management, or a non-compliance fee if you fail to certify. You might also encounter an annual fee (some high-risk accounts charge an annual account fee of say $99). Always ask for a full list of fees.
  
• Contract and Termination: Many high-risk merchant accounts require you to sign a contract (often 2-3 years). If you terminate early, there may be an Early Termination Fee (ETF). This can range from a few hundred dollars (common is $300-$500), or even a liquidated damages clause (e.g., pay the remaining monthly fees of the contract).
  
  Some modern providers are moving toward month-to-month even for high-risk, but assume there might be a term. If you’re unsure about a provider, try to negotiate a trial period or a shorter term. Also, some contracts auto-renew – note your dates so you can cancel at the end of term if needed without penalty.

Given these higher costs, you’ll want to factor processing fees into your product pricing. High-risk fees can eat into margins, so maybe adjust your prices slightly or find other ways to offset the cost (for example, encourage cash purchases in-store by offering a small discount, etc., though for online you have no choice).

The good news is that competition among high-risk processors has increased, and many offer fairly competitive rates for vape businesses nowadays. You might find quotes on the lower end of the ranges if your business is well-qualified. Always compare a few offers. And remember, the stability and support of a high-risk account is worth the added cost – it enables you to keep accepting payments reliably, which ultimately helps your business grow despite the fees.

FAQs (Frequently Asked Questions)

Q: Why do payment processors consider vape shops “high-risk”?

A: This is due to a combination of factors: Vaping products are heavily regulated (age restrictions, FDA oversight), which means there’s legal risk if a merchant is non-compliant. The industry also tends to have higher chargeback rates and fraud incidents than average. Additionally, public health concerns and evolving laws (like flavor bans or shipping restrictions) create uncertainty.

All these make banks wary – they fear losses from fines, chargebacks, or reputational damage. In short, the high-risk label is about potential financial risk to the processor, not necessarily a judgement on the business itself. It just means extra precautions are needed.

Q: Can I use PayPal, Stripe, or Square to process payments for my vape shop?

A: PayPal and Stripe – generally, no. Both have policies prohibiting tobacco and nicotine product sales on their platforms, and they have been known to ban or freeze accounts selling vape gear. Square – it’s partially possible: Square allows in-person transactions for age-restricted products (so you could use Square at a physical vape store with a card reader, checking IDs manually), but Square does not support online vape sales.

If you try to sell vape juice or devices through a Square online store or invoice, you violate their terms and risk an account freeze. In any case, using these mainstream services is risky for a vape business – many vape shop owners have had accounts suddenly shut down once the provider realized the business type. It’s safer to go with a high-risk merchant account designed for vape sales.

Q: What documents do I need to get approved for a vape merchant account?

A: Be prepared to provide a comprehensive set of documents. Common requirements include: business formation documents and any relevant licenses (e.g., tobacco retail license), a copy of the owner’s ID, recent bank statements and financial statements to show your finances, and if you have processing history, your last few months of payment processing statements (to review sales and chargebacks).

You should also have a voided business check or bank letter for the account where funds will deposit. Additionally, ensure your website and policies are ready for review – underwriters may check that you have proper age warnings, terms of service, and FDA-required notices. If they ask for anything else (like an inventory list or supplier invoices), try to comply. Providing a complete package of info as described in the guide above will cover most of it.

Q: How can I improve my chances of getting approved?

A: A few tips: Keep your chargebacks low (below 1% ideally) and have explanations ready for any past issues. Show that you have a stable, legitimate operation – a consistent financial track record and compliance with laws. Make sure you’re following all FDA and age restriction rules (21+ only, proper warnings), as compliance is a big factor. Be honest and thorough on your application – disclose exactly what you sell and provide all requested documents.

If you’re new and have no processing history, you might start with lower monthly volume and a reserve; accept those terms to get a foot in the door, then build up history. Choosing a processor that explicitly is vape-friendly also increases odds because they already know the industry. In short, transparency, compliance, and good preparation are your best tools for approval.

Q: What fees and rates do high-risk vape merchant accounts charge?

A: High-risk fees are higher than standard processing. You’ll likely pay somewhere in the range of 4% to 7% per transaction (exact rate depends on your processor and risk profile), plus a per-transaction fee around $0.25–$0.35. There’s usually a monthly fee (e.g. $20 or $30). Many accounts have a rolling reserve where, say, 5-10% of your sales are held in reserve for 6 months as a security buffer.

Chargebacks will incur their own fee, often about $25 each. You might also encounter one-time setup fees or annual fees in some cases. Our guide’s “Fees and Pricing” section above breaks this down in detail. The key is to compare a few offers – some providers might waive certain fees or give better rates if your business is solid. Expect higher costs than a normal business, but also remember this is the cost of accessing payment processing in a restricted industry.

Q: Is it legal to sell vape products online in 2025, and will processors support online sales?

A: Yes, it’s legal to sell vape products online on the federal level, provided you follow laws: you must verify buyers are 21+, only sell products that are allowed (many flavored nicotine products require FDA authorization now), and adhere to the PACT Act (which imposes strict shipping rules for vaping products). However, many common carriers (USPS, FedEx, etc.) have restrictions on shipping vape products, so online sellers often use specialized services.

From the payment processing perspective, high-risk processors do support online vape sales – you’ll be using an eCommerce platform with an age verification gateway and a high-risk merchant account behind it. Just ensure any processor you choose knows you are selling online and is fine with it (most high-risk providers are, as long as you have age verification in place).

Always stay updated on regulations: for example, the FDA’s requirement that new vaping products receive approval means you should ensure the products you sell have either approval or were on the market by required dates to avoid selling illegal products. Processors don’t want to support illegal sales, so staying compliant with those rules is part of keeping your merchant account in good standing.

Conclusion

Securing approval for vape shop payment processing in the US may seem daunting, but with the right approach it is very achievable. Remember that being labeled high-risk is not a dead-end – it simply means you must be more diligent in choosing your payment partners and presenting your business.

To recap, focus on vape-friendly payment processors that specialize in high-risk accounts rather than mainstream aggregators that can drop you without warning. Prepare a thorough application with all needed documentation – show the underwriters that your business is compliant, financially stable, and well-prepared to manage risks. Adhering strictly to age verification and FDA regulations is not just good practice, but a necessity for approval.

Be ready to accept slightly higher fees and maybe a reserve; consider these the cost of doing business in a regulated industry, and factor them into your pricing. Once you have your merchant account, maintain it carefully: keep chargebacks low by offering good customer service and clear policies, and continue to stay on top of regulatory changes (for example, if new laws come out, implement them promptly – this will keep you in the good graces of both regulators and your processor).

Running a vape shop in 2025 comes with challenges, but payment processing doesn’t have to be one of them. By following this guide and leveraging the right high-risk merchant services, you can secure a reliable payment processing solution for your vape business and focus on growth.

With preparation, transparency, and compliance, even high-risk merchants can build strong relationships with payment processors and keep those credit card machines and online carts humming safely and profitably. Good luck, and vape on – responsibly and within the bounds of the law, of course!