Customers have shifted their buying habits toward online payment methods, and merchants have kept up with this trend. This has remained evident in the drug paraphernalia industry, where the demand for head shop merchant account services continues to grow. Even though many head shops do not sell tobacco products, payment processors view the sale of paraphernalia, like glass pipes as high risk. Online head shops face more stringent restrictions from payment processors for card not present sales.
As financial institutions have continuously tightened tobacco underwriting guidelines, its become more difficult to find a payment processor. Working with an online tobacco credit card processing company lacking experience can cause headaches and unnecessary expenses later. Allied Payments specializes in head shop credit card processing and glass pipe payment processing services.
What is a Head Shop Merchant Account
A head shop merchant account is a payment processing account set up exclusively for head shops. Also known as a tobacco shops, many financial services companies have distanced themselves from the industry. While these processors have reduced the acceptable business models, there have been banks emerged with a risk appetite.
Most items sold in head shops fall into a higher-risk category. Financial services companies classify some of these products as drug paraphernalia, challenging approval for a merchant account. Partnering with a payment service provider that approves of high-risk industries, similar to head and tobacco shops is the best step for opening merchant accounts with longevity.
These are some of the most common products sold in tobacco shops. Most of these are considered high risk in the payments industry.
- Bongs
- Cigar Cutters
- Dab
- Detox
- Grinders
- Glass Pipes
- Glassware
- Hydroponics
- Incense
- Lighters
- Pipes
- Pipe Cleaning Products
- Pipe Screens
- Roach Clips
- Rolling Machines
- Rolling Papers
- Water Bubblers
Bongs, also known as water pipes, are commonly used smoking devices for the consumption of tobacco and cannabis. Made of composite glass or plastic, they are designed to be durable and withstand repeated use through heating. Using water inside the pipe, smoke is drawn through the water towards the mouthpiece by inhaling. This is thought to create a more pleasant experience since the smoke is smoother after the water acts as a filter separating heavier particles.
Glass pipes, also known as pieces, bowls,s or smoking pipes, are commonly used with tobacco or cannabis products. In various shapes, sizes, and materials, pipes use a filter to separate particles and create a smoother smoking experience. Most of the time, these pipes are decorated and are made of composite glass, but they can also be made of ceramic, wood, or stone.
Some of these products can be sold online, but associating them with tobacco or smoking might make them a prohibited item. Setting up a head shop merchant account might require businesses to follow specific guidelines for terminology and images. If merchants know these headwinds beforehand, they can properly prepare their websites for underwriting.
Merchant Account Online Alternatives for Head Shops
As merchant services providers have tightened the restrictions on the different industries they service, businesses using head shop credit card processing services have experienced pushback. While many larger retailers can set up services, medium-sized to startup businesses have been left without many options.
A merchant account that accepts debit and credit cards is possible when working with the proper bank and selling non-prohibited items. These businesses must adhere to the guidelines set forth by the underwriters, but merchants often do not want to be restricted. This creates issues between the payment processors and merchants, resulting in many accounts being terminated for lack of compliance.
The most common alternative merchant account solution that has become available is an electronic check account. By accepting checks, merchants can avoid the restrictions the payment card associations set and imposed by the payment processors. Abiding by local and state laws, businesses can accept e-check payments without being concerned with violating most payment processing guidelines. In addition, the fees charged by most e-check payment processors are significantly less than credit or debit cards, becoming a low-cost alternative for merchants.
Businesses shopping around for affordable and practical payment solutions can contact Allied Payments. Our team of head shop credit card processing professionals is happy to help businesses weigh their opens and determine what their best solution is.
Payment Gateway for Head Shops
Besides rates, the payment gateway is one of online businesses’ most important payment processing services. Having a processor that can offer a reliable and secure payment gateway is essential for e-commerce success. At Allied Payments, our payment gateway is fully PCI-Compliant and comes with a 99.9% uptime track record, making it one of the most reliable services on the market.
Glass Pipe Merchant Account Requirements
Merchants preparing to apply for a head shop merchant account should be aware of the types of documents that will be required. Underwriting will be more critical of head shops than most other merchant accounts, making supporting documentation even more important. Some of the most common requirements from underwriters will include the following:
- Completed Application
- Copy of Government ID
- Voided Bank Check
- Business Bank Statements
- Merchant Account Statements
Providing underwriters with a completed application will help improve the speed at which applications are being reviewed. While not always the case, underwriters might also become leary of incomplete applications for fear that information is being withheld on purpose. The time it takes to review an application before submission, it can prevent merchants from experiencing days of delays.
A simple color photo will suffice for the Government ID and a voided check requirement. Underwriters need to complete their KYC documentation and will want to keep a photo ID on file. The voided check ensures that the settlement account is set up properly, so payouts to the merchant are not delayed. Many applications have banking information filled out incorrectly; thus, providing a copy helps the underwriters verify banking information is correct.
A glimpse of the company’s financial history is essential to the decision-making process. The processing history of a business will let the payment processor see how the business operates; does it experience high chargebacks or high returns? Seeing the monthly volume trends is crucial to prevent surprises when the account starts accepting payments. Understanding how the financials will also let the underwriters know if the company can handle chargeback, refunds, and their monthly fees.
In addition to supporting documents, underwriters might conditionally approve an account while requiring additional documents or conditions. This can include the following requirements or additional terms.
- Website Compliance
- Photos of Inventory and Store
- Verification of Orders
Many times businesses that are operating in a higher-risk category will need to abide by strict website guidelines. Underwriters are prepared to help the business make changes to get their business in full compliance. In some cases, underwriters will want proof of inventory in the business location. One of the final ways that payment processors can verify transactions is by calling random customers to confirm their orders and that the products were received. Any of the above requirements are in place to limit the risk of the payment processor and help the merchant operate with reduced risk, aiding in the longevity of the merchant accounts.
Start Head Shop Credit Card Processing Services Today!
Like hookah merchants, businesses that sell glass pipes online have experienced increasing difficulty finding approvals for a merchant account. Even glass pipe dealers not selling tobacco products have had little to no luck finding reliable merchant accounts for their businesses. This has made it difficult for e-commerce businesses to accept payments in the glassware industry.
Government guidelines have expanded to include these tobacco accessories as regulated products, forcing more and more payment processors to decline to accept these merchants. Facing stiff fines and regulatory penalties has become too risky for many merchant service providers to chance. This has resulted in many of payment processors dropping existing glassware and glass pipe companies while startups struggle to find service providers.
As an experienced payment processor for the glass pipe industry, Allied Payments has several solutions for glass pipe and glassware businesses. Our financial network allows us to place most medium to high-risk businesses without an issue. As a specialized glass pipe processor, we help new and existing merchants sell their pipes and glassware products online.
Frequently Asked Questions (FAQ)
What is a head shop merchant account?
A head shop merchant account is a specialized type of payment processing account that allows businesses selling smoking accessories, glassware, vaporizers, and other related products to accept credit and debit card payments. Due to the high-risk nature of the industry, head shop owners typically need a merchant account provider experienced in supporting high-risk businesses.
Why are head shops considered high-risk by payment processors?
Head shops are labeled high-risk because they sell products that, while legal, are often associated with regulated or restricted industries. There’s also a higher potential for chargebacks, regulatory scrutiny, and reputational risk, which makes traditional banks hesitant to work with them.
Can I get approved for a head shop merchant account if I sell only legal products?
Yes, even if you sell only legal smoking accessories and paraphernalia, you can still get approved for a head shop merchant account. However, you must partner with a high-risk payment processor that understands your industry and complies with legal guidelines.
What products can I sell with a head shop merchant account?
You can sell items like glass pipes, rolling papers, vaporizers, hookahs, water pipes, grinders, and other smoking accessories. However, illegal substances and drug-related items are strictly prohibited and will disqualify your account.
How do I apply for a head shop merchant account?
To apply, you typically need to submit:
- A completed merchant application
- Business bank statements (usually last 3–6 months)
- A valid government-issued ID
- A functional website with clearly displayed products and a privacy policy
- A business license or incorporation documents (if applicable)
What are the typical fees for a head shop merchant account?
Fees can vary based on your risk profile, processing volume, and chargeback history. Common fees include:
- Setup fee
- Monthly account maintenance fee
- Transaction fees
- Chargeback fees
High-risk processors usually charge slightly more due to the added risk involved.
How long does it take to get approved for a head shop merchant account?
Approval times can range from 24 to 72 hours if all documentation is submitted correctly. In some cases, underwriting may take longer depending on the complexity of your business model or product offerings.
Can I use a regular payment gateway for my head shop?
Most mainstream payment gateways (like Stripe, Square, or PayPal) do not support head shop transactions due to the high-risk categorization. It’s important to use a payment gateway designed specifically for high-risk industries, which integrates seamlessly with your head shop website.
What should I look for in a high-risk head shop payment processor?
Look for a processor that offers:
- Experience with high-risk merchants
- Chargeback management tools
- Transparent pricing
- Fast and reliable customer support
- Secure and PCI-compliant technology
- Compatibility with your eCommerce platform
Can Allied Payments help me set up a head shop merchant account?
Absolutely. Allied Payments specializes in high-risk merchant services and can provide you with a secure, reliable, and fully compliant head shop merchant account. We offer tailored solutions to meet your business needs and help you start processing payments with confidence.
They’re a well-run, trustworthy company, and every time I’ve reached out with a question, they’ve been thorough and thoughtful in their responses. You can tell they truly care about supporting their clients.
Our business is often considered “high-risk” by many processors, so finding the right partner can be challenging. These guys made the whole experience smooth, and I feel very confident working with them.
If you’re a business owner looking for a solid, reliable merchant services provider—especially if your needs are a bit more specialized. I highly recommend them.
Thank you Charles
