New FDA Regulations Affect eCig and Vape Credit Card Processing

What is the new FDA Rule

Beginning on August 8, 2016, the U.S. FDA finalized a new rule extending its authority to regulate all devices that produce a vapor that is inhaled under the same rules it applied to tobacco sales. Meaning that vaporizers, vape pens, e-Cigarettes, hookahs, E-liquids, E-liquid containers, Cartridges, Atomizers, Certain batteries, cartomizers & clearomizers, digital display or lights to adjust settings, tank systems, drip tips, flavorings for ENDS, some programmable software, cigars and pipe tobacco are now regulated in the same way that cigarettes have been under the 2007 Family Smoking Prevention & Tobacco Control Act.

Who Will This New Rule Affect

This rule will have a particularly strong effect on certain parts of the eCig / vape industry, and how small businesses in particular will operate and accept credit card payments going forward. Those particularly affected are discussed below:

1. eCig / Vape Manufacturers
   All e-Cig and vaping product manufacturers (which includes companies making changes as small as offering a new blend of flavor, new bottle size, etc.) must now register their product with the FDA for approval before it can be legally sold. (Note: there is a 24 month window for manufacturers to sell existing supplies and products).
2. Vape Shops That Mix Their Own Liquids
   All new products have to be approved by the FDA. The cost for having a new product approved by the FDA will be as high as $1,000,000, meaning effectively small businesses will not be able to offer their own products going forward, but only resell products by larger companies that have paid for the FDA approval. Because the definition of ‘new product’ is so broad, for retail businesses, this will likely require vape shops that mix their own liquids to shift their business model to offer only standard products.
3. eCommerce eCig / Vape Product Companies
   Previously, eCommerce businesses selling eCig related products, but which did not sell tobacco, did not have to register with Visa and MasterCard or pay the $1,000 per year fee to be able to accept credit cards. That has changed, and going forward, businesses that wish to sell eCig or Vape related products over the phone or internet will have an extra hurdle and cost to be able to accept credit card payments. They will need to pay $1,000 per year ($500 to Visa, $500 to MasterCard), register their website with Visa and MasterCard, and in most cases obtain a letter from an attorney stating that the business is complying with all applicable laws (such as age verification).

[bctt tweet=”If you sell eCigs and vape products online, the new FDA rule just made business $1,000 more expensive.”]

In sum, if you are a vape shop that mixes your own liquids you likely will need to change your business model over the next two years. And if you plan to sell eCig or vape related products over the internet, you’ll need to be prepared to obtain an attorney letter and pay a $1,000 annual fee to be able to accept credit cards.

Need an eCig or Vape Merchant Account?

Soar Payments is an award winning merchant account provider that focuses on high risk industries such as eCig and vaping.

If you need a merchant account for your eCig or vape business, and would like to understand your options or how these new regulations will impact you, give us a ring. Or if you’re ready to apply for a merchant account, simply apply online.