What's the Best High Risk Credit Card Processor for My Smoke Shop?

Aug 2, 2024
Credit card machine sitting on blue background with text that says "Best High Risk Credit Card Processor For My Smoke Shop"

Hammer? No. Baseball bat? No. Chainsaw? Better, but no. Katana? Now that’ll do.

Oh, are you wondering why Got Vape Wholesale is tooling up like Butch in Pulp Fiction?

Well, as a matter of fact we are about to kick the door open and descend into the basement of depravity that houses a peculiar gimp known only as “high risk credit card processors”.

That’s right; for this Got Vape Business Investigation we've gone fully down the rabbit hole of high risk credit card processing, to give you a definitive understanding of not only just how rigged the deck is, but also to point you towards legitimate credit card processors that we have personally vetted.

To accomplish this, we have spoken with Smoke Shops across the country to directly hear your thoughts, horror stories, and experiences dealing with high risk credit card processors.

SPOILER ALERT: This is Not A Paid Promotion

First and foremost, we wanted to clear the air to let you know that we are not receiving a single cent from any of these processing companies. We’re a distributor, not a snake oil salesman.

This is why we can proudly say the opinions in this article are entirely at Got Vape Wholesale’s own discretion.

We quite frankly couldn’t care less about boosting these companies, instead we are here to help YOU the Smoke Shop owner not get screwed and avoid over paying on BS rates.

To that end; we ask that if ANY of you have a less than stellar experience with the recommendations included, PLEASE write to us at iblack@gotvape.com and we will update our article accordingly!

Don't worry, at Got Vape Wholesale we take loyalty VERY seriously. That’s why the various sources and Smoke Shops that we’ve used in this article today will not be revealed now or at any time in the future. 

Thus, if you send anything to us, we guarantee that your identity will be protected in perpetuity, and that the processors will never know what hit them.

All we care about is getting you a better deal, as we have had our own experiences with being overcharged and had to fight by ourselves to find savings; we want to make it easier for you to beat that same system and get the cold hard cash you deserve.

Now that we’ve got that out of the way, welcome to the high risk credit card jungle!

Table of Contents:

What is Credit Card Processing?
Who Are the Major Players in Credit Card Processing?
What is High Risk Credit Card Processing?
What Is Considered a High Risk Transaction?
What Are the Fees for High Risk Processors?
What is Considered a High Risk Merchant?
Major Processing Players = Major Thieves
The Fish Rots From the Head Down: Who Owns the Major Players?
The Horror! Tales from the Major Card Processing Crypt
Waking Up Dead: When Good Square Goes Bad
Sleeping With the Fishes: What Happens When Your Processor Goes Broke?
Always a Bigger Baddie: What Happens When a Bigger Company Buys Out Your Smaller Payment Processor?
How Have Smoke Shops Survived?
Using an In Store ATM For Kratom
Using a Faux Flower Vase Business to Dodge Restrictions
Protecting Your Business by Cashing Out Your Account Daily
Old School Computer Tech
What Do Other Smoke Shop Owners Look for in a Processor?
Getting the Best Rate: Flat vs Interchange Plus Pricing
What High Risk Credit Card Processor is Best for My Smoke Shop?
Best Rate Merchant Service
The Other Bachelors
Kaja Payments
Bank Card USA
Velocity Business Solutions
Processing Our Outro

Above view of credit card machine with text that says "what is credit card processing?"

What is Credit Card Processing?

Credit card processors are the companies that relay financial information between banks in order to allow for the transfer of funds from the customer, to your business.

In order to allow for safe and secure transactions, businesses all over the globe rely on these types of companies to process their customers' sales every day.

The way that processors make money is through the fees that they charge on each of your transactions, these are their “rates” and they can range from minuscule fractions with monthly fees, to on average 1.5 - 3.5% per swipe.

While these companies allow all of our shops to literally function, providing the wind to our sales, they also simultaneously exact a toll on each and every transaction.

But until A.I. figures out how to open our third eye and allow for psychic credit card transactions, we are going to want to answer the customer question of “Can I Use a Credit Card at your Smoke Shop?” with a confident “Yes!”.

Who Are the Major Players in Credit Card Processing?

Some of the mainstays of general credit card processing are Clover, Square, Stripe, PayPal, Helcim, and Mastercard just to name a few.

These companies have been around for a while and are able to survive thanks to their size, not the quality of their services.

Much like other too big to fail industries, these companies get to live in the coveted position of operating as titans amongst the smaller players, their every move making waves for the rest of the industry.

illustration of a credit card transaction with card reader machine

What is High Risk Credit Card Processing?

High risk credit card processing is a designation used to flag any businesses that are at a perceived “high risk” of encountering fraud, chargebacks, and heightened financial risk.

With most high risk credit card processors you can typically expect two things: awful rates and even worse service.

"It's highway robbery. They all jack up the prices, downgrade their service, and treat you like you are bothering them to boot. "

—Shop Owner, Pennsylvania, USA

Yup. With such a tight grip over the market and being completely devoid of any incentive to give high risk merchants a better deal, they have essentially left us up $hit creek without a paddle.

What Is Considered a High Risk Transaction?

Every sale that takes place in your Smoke Shop is going to be considered a high risk transaction by the credit card processors.

It doesn’t matter how large the purchase is, what the product actually is, or any other number of variables. It is simply the fact that we are in the industry of smoking and tobacco that these levies are placed upon us.

What Are the Fees for High Risk Processors?

The processing companies will often have a separate set of rates for high risk merchants, if they even allow you to do business at all.

On average high risk merchants will have to pay a rate around 1 - 2% more than if they were just a typical business. As we all know, this adds up rather quickly and ends up being a regretfully necessary anchor you have to deal with.

Images of adult only sign, dry herb leaves, and online gambling on blue gradient background with text that says "High Risk Merchants"

What is Considered a High Risk Merchant?

The other major industries that survive despite being considered high risk include adult entertainment, online gambling, and crypto currency. So obviously, we are in good company with our fellow high risk merchants.

While the fact that we have to deal with increased rates and shoddy service unites all of these different industries, what truly binds is the fact that we are not only able to still survive, but thrive despite all of these restrictions.

What this proves is that our Smoke Shops are legitimate businesses where people want to spend money, despite all the hoops high risk credit card processors make us jump through.

Major Processing Players = Major Thieves

Unfortunately for us, these major credit card processing companies are from head to toe a collection of absolute snakes in the grass, helping you up until the moment when they can absolutely screw you.

"As we are in the high risk credit category, it basically gives them carte blanche to treat you as a second class customer where they have all the power and you have nothing."

—Shop Owner, Great Lakes Area, USA

Products like CBD, kratom, and tobacco are going to cause these companies to legitimately short circuit as they try to keep you as a customer, while at the same time hampering your every move.

This can be deadly for your business, all the while not even bothering these massive conglomerates that could care less about your success.

The Fish Rots From the Head Down: Who Owns the Major Players?

You may not be surprised to learn that even these giants of e-commerce are in fact, not the ones running the show! In fact, most of the companies listed above are simply one piece of a much larger conglomerate corporation.

For instance the folks at Square are in fact owned by Block, Inc. Never heard of them? Well how about it’s a 228 billion dollar company co-founded by Jack Dorsey the creator of Twitter, and also owns Weebly, Cash App, and Tidal as subsidiaries.

These behind the scenes connections between businesses are not some sort of conspiracy, but in fact a blueprint for how massive corporations are able to corner markets and block out or impede small businesses that don’t fit the status quo.

What this allows for is the near universal set of rules that have been applied to “high risk” businesses such as ours and allows for this uneven playing field to exist.

All of this is exactly why it is so hard to find a solid payment processor for your Smoke Shop, it’s because the rules were written by cheats who are trying to bully you into paying a higher rate.

The Horror! Tales from the Major Card Processing Crypt

Due to the ridiculous boxes that high risk credit card processors place Smoke Shops in, the amount of indignities, duplicates, and down right thievery they have had to deal with would make even the Crypt Keeper blush.

To give you an idea of just how f’d in the head these companies are, we wanted to share with you a couple of tales of legitimate financial terror that we’ve come across in our investigations.

Waking Up Dead: When Good Square Goes Bad

On one dark and stormy night, a Shop Owner who had been working with Square for over a year woke up to an email in their inbox informing them that their account had been deactivated overnight, as Square discovered that the shop actually violates their terms of service.

"We were absolutely blindsided by it. Had spoken with my rep on the phone literally the day before and everything was going smoothly. Completely unprofessional in my opinion."

—Shop Owner, Florida, USA

Instead of telling them this from square one (no pun intended), these devious automatons decided to randomly pull the rug out from under this shop owner with ZERO notice.

When it rains, it truly does pour because when this business owner tried to sign up with another major processor they were told that their credit score was too low to qualify. With their business frozen and no other cash flow, the owner was in a bind where they couldn't even raise their score if they tried!

This took their cash flow from 60 - 0 within the blink of an eye and put them into a position where they were guilty until proven innocent. Except you don’t even get a public defender, it’s you sitting on the phone for hours as customer service bounces you from one department to the other hoping you just give up.

Sorry in advance if you were expecting a happy ending, but for this instance the shop owner was unable to stay afloat in this rigged whirlpool and their shop went under. A fraction of their funds were eventually returned by Square, but the damage was already done.

posted note saying company closed with business man packing up his office supplies

Sleeping With the Fishes: What Happens When Your Processor Goes Broke?

Here’s a fun one for you, we heard from an Owner located in the Southern United States that they had been working with a smaller payment processor that accepted high risk accounts like theirs.

Well everything was going swell until one day they got a call on the phone, the payment processor had gone belly up and were shutting their doors for good. In an instant this turned the owner's world upside down and essentially sent them into a brief tail spin.

Lucky for them they were able to survive for two weeks on meager cash only transactions before they were able to connect with another processor for an even higher rate than the one they had before.

The risks with some of these smaller, more independent firms is that it's a dog eat dog market, and not all of them are going to be cut out to survive. So when you are looking over your prospects, make sure they have been around for long enough to have stability.

Always a Bigger Baddie: What Happens When a Bigger Company Buys Out Your Smaller Payment Processor?

From a Smoke Shop in the great state of Texas, we heard a particularly chilling tale of an owner that was originally denied by a big credit processor who went on to find a small business that actually would play ball with them.

The twist? This small business was soon bought up by the VERY SAME large processor that had denied them in the first place and after several heart attack inducing weeks was kicked off of the newly merged processor!

"Made it through by the skin of our teeth. One day you wake up and find out your successful business is f*&#@d!"

—Shop Owner, Texas, USA

This is the real life equivalent of escaping the ocean while running from Jaws, only for him to show up at your apartment riding a bicycle! There’s no way around it!

As a result they had their account frozen and lost out on all sales during their review period and for several weeks after as they scrambled to find someone new.

Yet another dire reason why finding a high risk credit card processor that is confidently on its own two feet is an absolute must when you are finding a deal.

How Have Smoke Shops Survived?

While all this sounds pretty bleak, the truth is thousands of Smoke Shops across the country have been able to navigate these waters, as this is another case of necessity proving to be the mother of all inventions.

In order to get a full grasp on the situation, we also reached out to Smoke Shops across the country to learn real life examples of how owners have specifically and successfully fought back.

Note; we aren’t officially condoning or even suggesting you use these methods, instead we are just letting you know what others tried.

Knowledge is power, so why not share it?

front view of an ATM machine inside store

Using an In Store ATM For Kratom

Over on the western side of the country, we spoke with a successful Smoke Shop based out of the Golden State of California that was able to creatively use their in store ATM to sell kratom.

The issue they had was that while their processing company allowed their usual tobacco, vaporizer, and other smoking accessories just fine, but when it came to alternative products like Kratom they threw up a huge stop sign and said NO.

This was trouble for the Shop, as they told us at the time Kratom was accounting for around 5% of their sales, which is why they realized they needed a way to let customers buy the products they wanted without being a huge inconvenience.

Their solution was instead of ditching their processor and having to find a new one (also losing out on CC sales in the meantime) they installed an ATM machine in their shop to have customers pay for their kratom purchases in cash only.

To assuage the small amount of customers who bristled at the idea of paying an additional ATM fee, they would occasionally eat the fee by subtracting the $3.50 from the sale. At the end of the day completing the larger sale is worth taking a couple dollars off the top.

"Sure you had people complaining about having to use the ATM, but you get a lot more complaints when you say I can't sell you kratom anymore."

—Shop Owner, California, USA

As a result of all this, the Shop was able to keep rolling with their processor, have no hiccups in their sales, and even ended up with the bonus of now having a working cash ATM in their shop for any customers who would rather pay that way.

For total costs, the owner told us that they ended up paying around $3,000 all told for their ATM with installation and other fees, a hit that was quickly made up thanks to their renewed kratom sales.

On average stores spend around $2,000 - $5,000 for a single ATM, depending on the deal they get and from which bank the ATM is sourced.

Using a Faux Flower Vase Business to Dodge Restrictions

Several thousand miles and a dozen states away, we spoke with a Smoke Shop owner that was based on the East Coast who told us their tale of using flower vases to dodge restrictive processors.

How exactly did they accomplish this?

Well instead of listing their business as a Smoke Shop with the processor, they were able to make them believe that they were in fact a store that sold flower vases.

Apparently they had to even go to the lengths of creating a phony website with a range of products and other bogus information to make the whole thing appear above board.

It was reportedly incredibly time consuming, fraught with anxieties of getting caught, and increasingly difficult to square their website with the products they were selling.

"Now that we can look back at it the whole operation was kind of insane, couldn't imagine doing it in this day and age. But the internet used to be the wild west back then."

—Shop Owner, East Coast, USA

Thus when they sold a $200 dollar water pipe and the customer swiped their CC card in the machine, the charge will be listed as “large rose vase” by both your processor and their bank.

This way their information was still relayed by their processor and the money was transferred from the bank to them without being locked because it appeared as “large rose vase”.

While this worked for this specific owner, they cautioned us that this method is risky, fraudulent, and if caught could cause your shop to enter a death spiral of legal challenges and fees.

They expressed emphatically that they wished they could have avoided it, but their financial situation forced them into it by not having enough leeway to lose CC sales while setting up a new account with a more lenient business.

illustration of man transferring funds into his back accound

Protecting Your Business by Cashing Out Your Account Daily

Over in the midwest of the country, we spoke with a Shop Owner who had such a shaky and tumultuous relationship with their processor - that they would close out their account multiple times a day.

This way if the payment processor ever decided to change their minds or suddenly find something “wrong” with their account, they won’t be able to lock up as much of your money while they deliberate the issue.

So instead of having all their money sitting in an online wallet that’s ultimately controlled by the payment processor, they would begin the process of transferring the funds to their bank account several times a day to speed the whole process up.

"Yes, I would close out daily, if not multiple times a day. It just became a part of my routine after having my processor totally lock my account up, after that I said never again."

—Shop Owner, Mid West, USA

While their processor allowed them to do this, not all are so lenient and some of the larger ones have much more stringent restrictions that prevent you from doing this or charge you money for the privilege.

Old School Computer Tech

From the central United States, we spoke with a shop that has been with their processor for a while now and were able to set up a slightly old school system where all transactions are item-less, money simply flows in and the costs are charged to the card.

This way they were able to sell items like kratom and CBD with zero problems, the Shop explained that they had worked out a “what they don’t know can’t hurt them” type of deal and were able to get around the restrictions that way.

"What they don't know can't hurt them, but it could of hurt us if they found out. Luckily we managed to be okay until we found someone else."

—Shop Owner, Central, USA

While this seems tricky to emulate and fraught with potential risks, it does go to show you that sticking with your processor and forming a relationship can pay dividends in the future.

What Do Other Smoke Shop Owners Look for in a Processor?

As we spoke to Smoke Shop’s around the country about their credit processor history, we noticed that while there was no shortage of horror stories - there were also quite a few stand out positives that all of the best processors all seem to have in common.

First amongst the needs was to have a processor that understands the nature of smoke shops and will help protect you from activities like rampant chargebacks and credit card testing.

These types of fraudulent activity work over time to gut your bottom line by leaving you holding the full cost of the sale, while at the same time driving your credit score into the dirt.

Shop Owners said that having a processor that went to bat for them and actually fought back against the charges was truly invaluable and had saved them tens of thousands of dollars over the years.

Another point we heard was that having someone readily available on the phone was incredibly important as well. The ability to correspond with a real human, to react to problems in real time was said to be essential to them maintaining their connection with the processor.

Lastly, something that we picked up subtly was that once Shops found a CC processor that worked for them, they stuck with them like glue.

Because finding someone who plays ball is so tough and destructive to your finances, they more often than not would try their best to make a current situation work out.

text that says "Flat Rate Vs Interchange Plus Rate on a green and blue gradient background with percentage signs

Getting the Best Rate: Flat vs Interchange Plus Pricing

Before you start speaking with processors, it's important to have a brief understanding of what the rates will look like and what options you will be presented with.

When corresponding with your potential credit card processor, you are often going to be offered two different rates; a flat rate or an interchange plus rate.

Flat rates are your basic meat and potatoes, it's a predetermined fee that will be exacted each and every time you make a sale no matter what the item is or what credit card was swiped.

A sample flat rate will look something like: 3.2% + 15c per authorization.

This means that you will pay 3.5% of the total cost and an additional 15 cents. The rate won’t change unless your terms are altered and it sets an easy flat line for you to anticipate.

Interchange plus pricing alternatively represents a rate that will fluctuate depending on what the item is and what credit card is being used.

This is because you’re going to have to pay whatever the specific interchange fee is for the credit card and then additionally pay a predetermined amount to your processor on top.

A sample interchange plus rate will look something like: 1% + 15c + interchange fee.

The interchange fee in this part will often be hidden as you won’t know what it is for each card as they all have different numbers depending on what exactly is being sold.

These rates can be good as they allow for lower rates, but for the most part the interchange rate for smoking related products is much higher than regular ones, so it's important to be aware when negotiating with the following processing companies.

What High Risk Credit Card Processor is Best for My Smoke Shop?

Enough with conjecture, let's get into the nitty gritty and finally answer the question at hand: What’s the best high risk credit card processor for your business?

Our current answer? Best Rate Merchant Service.

Best Rate Merchant Service

We can say with complete confidence that when it comes to processing credit cards for smoke shops, Best Rate Merchant Service has been around the block and then some.

Beginning all the way back in 2008, co-founder Samson Ly saw the value being wasted with smoke shops and realized that they could offer processing services that were both cheaper and better.

Not only that, but they were willing to wade knee deep into the market at a time when other payment processors were clutching their pearls and running for the hills. With courage and most importantly, brains, the team charged in head first and the rest is history.

That history? Well Best Rate Merchant Service has to date processed over $10 billion dollars in transactions and until 2014-2015 were the sole processors for the online and wholesale smoke industry, working with big names like Altria, Njoy, Green Smoke, and even Got Vape Wholesale.

That means that Samson and his team of professionals have been killing it at the game for over 10 years and have done that while working almost exclusively with businesses in our industry.

Highlights that demonstrate their immense depth of knowledge include expert business advising to help you grow your business and learn more about protecting yourself.

Some of the programs included in this include PO Financing, Accu Age for customer ID verification, and Berify.io for authentication tech that links each product to its owner. When added up together these can give you the protections that you need against all the possible fraud you may encounter.

More so than any individual fact, the reason we are recommending Best Rate Merchant Service is because they have actually been working in the industry for a decade, they actually know what’s up with Smoke Shops, and they actually saved us at Got Vape Wholesale serious money when we linked up with them.

So when it comes to Samson and his team, you can rest assured that they are ready to go to war for you and get you the profits you deserve.

Call Best Rate Merchant Service with all your inquiries at 800-689-8688.

The Other Bachelors

While we think that Best Rate Merchant Service on a whole can get you a solid deal, again we only know this because they saved Got Vape Wholesale a huge chunk of change, we are not going to claim that it is a one size fits all situation.

Because of that, we made sure to keep a tally of all of our runners up in order to give you a comprehensive list of options and let you pick the best one for you.

Below we are going to break down Kaja Payments, Bank Card, and Velocity Business Solutions.

Kaja Payments

Based out of the Big Apple itself, these New York City based Credit Card Processors know a thing or two about cutting through the bullsh#t. With a street wise New Yorker vibe, the team at Kaja Payments we spoke to was not only eager to play ball with Smoke Shops, but ready to go to bat for you.

Having been in the game for 7 years, the team at Kaja Payments broke into the market to help small businesses just like yours. They originally formed as an offshoot of the larger firm, Evo Payments International, in order to have a leaner team that can more adequately meet the needs of their clientele. In layman's terms, Kaja Payments set out on their own.

In terms of fraud protection, Kaja explained that they offer personal coaching to businesses in order to help you protect yourself. This includes stuff like creation of an online commerce site and how to insert protections like captcha codes.

To help with this, Kaja Payments tells us they are available around the clock all week, to help you with any issues or problems that may arise. That means you can ring them up anytime you have a question in order to always make the best decision.

When it comes to selling lucrative alternative experiences like kratom, CBD, and mushrooms; Kaja is also ready to go with one in the chamber. Selling these products with them is no issue, they know the avenues that you have to go down in order to do it without any legal issues.

As a whole it appeared to us that as far as being legitimate, Kaja Payments is there. They have a team of solid people who aren’t going to rip you off and legitimately want to build a long term relationship with your business.

Bank Card USA

Hailing out of our home state of California, the team at Bank Card USA are located out of Westlake Village, just outside of the city of Angels itself, Los Angeles.

Having been in the game since their founding in 1993, Bank Card USA has been around the block more than a few times and has worked to build their merchant numbers to 100,000 served.

Bringing an extra bit of muscle to the equation, is the fact that Bank Card USA is a registered independent sales organization of the major bank Wells Fargo. This means that they are a third party payment processor of Wells Fargo, and are allowed by them to independently handle the accounts of businesses.

When it comes to the designation of “high risk”, Bank Card USA is fully on our side as they too view the policies of grouping industries together based on prejudice is total bunk. That’s why they are ready to get you set up without raking you over the coals.

As a whole Bank Card USA is a solid choice that is absolutely open to working with you and won’t result in a complete dead end like some of the less then helpful major players.

Velocity Business Solutions

From the Sunshine State, we have the likes of Velocity Business Solutions who has reps across the country but is headquartered out of Saint Petersburg, Florida.

To start Velocity has been in the game for over 20 years now, a substantial amount of time to survive as an independent processor which means they are doing more than a couple of things right.

In our conversations they spoke of having over 500,000 accounts in the United States since their founding in 1991.

When it comes to alternative cash cows like kratom and CBD, Velocity is all revved up and ready to go now. That’s because as long as it is Federally legal, they have absolutely no problem with helping you process the purchases.

We also spoke with Velocity about their various fraud protections, from our understanding as long as you stay on top of it they will help you make sure that the bank is the one to pay all the disputed charges and not your shop.

They will even go so far as to physically put systems in your shop to make sure that you have your guard up.

Processing Our Outro

So, what now, eh?

Stay with your current credit card processor if they are meeting all of your needs!

If you are unhappy or are looking to start fresh, consider Best Rate Merchant Service or one of the others!

Or don’t!

What we want is for you to use the information in here to help you get a better deal with a processor, no matter who they are.

Our recs are solid, but they are by no means everything that is out there, you never know what company may approach you, just be sure to make sure you are getting a good deal and all the coverage that we’ve spoken about.

And as a reminder - please let us know if you have any negative experiences with ANY of the companies listed above! Write in at iblack@gotvape.com and we will update accordingly.

For more investigations, insights, and ideations from Got Vape Wholesale make sure to check out our full catalog available right here at our official Wholesale Business Blog.

Recent articles have broken down tips to move back stock, some steps to add feng shui to your interior design for boosted profits, and a detailed breakdown of how you can make bank with mushroom gummies.

Thanks for reading and have a profit filled rest of the year!


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