In August of 2016, the FDA (Food and Drug Administration) started rolling out new regulations for the e-cigarette and vaping industry, with more changes expected and tighter oversite as the industry is reformed. Part of the reason for the reforms has to do with how vaping and e-cigs are related to the tobacco industry.
As vaping has been widely accepted as an alternative to smoking cigarettes, the FDA wanted to ensure the industry is regulated with tighter controls to avoid marketing to children and teens. Plus, many of the e-liquids used in the devices do contain some level of nicotine—one of the key ingredients in tobacco cigarettes.
What Changes Have Been Made?
One of the biggest changes was the FDA requirement that businesses, regardless of size, register with the FDA and obtain permission to sell e-cigs, vaping devices, and related items. Current retailers in this industry can continue to operate and were given a two-year timeframe to apply, with another year allowed for FDA review and approval. Other changes include:
- The sale to those under the age of 18 is prohibited, just like tobacco products.
- Retailers must provide details about the manufacturers they source products from, as there are also new rules regarding manufacturers.
- In cases where a vaping shop also manufactured its own e-liquids and other items, they must provide a list of ingredients and quantities used, as well as obtain permission to continue to manufacture said items.
- Retailers are also prohibited from using the words “light,” “mild,” and others, similar to the prohibition placed on tobacco several years ago.
- Vape shops can no longer give out free samples of e-liquids and other products and must charge for them.
- The FDA even reserves the right to inspect retailers with or without prior notice.
What Effects Will This Have on Credit Card Processing and Merchant Accounts?
One of the most noticeable effects these changes have had so far on e-cigarette and vape merchant accounts, required for credit card processing, is many providers have suspended and/or stopped accepting applications for new accounts. Some merchant providers even canceled existing accounts due to the uncertainties the FDA regulations would have on the industry and the increased risks of potential chargebacks.
Additionally, the rating of these types of merchant accounts was reclassified to “high risk” merchant accounts. As a result, the costs of processing debit and credit transactions either online or in-person have increased fees for retailers.
While the future of the e-cigarette and vaping industry has many unknowns, in regards to the FDA’s involvement and future regulations, many consumers are still making purchases on a daily basis online and at local vaping shops.
If your provider has canceled your merchant account or significantly raised your rates or if you are entering the e-cig and vaping industry, we invite you to contact us, here at Leap Payments, to learn more about our merchant accounts for e-cig and vaping retailers, and our guaranteed lifetime rate lock by calling (800) 993-6300 today!
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