Many retailers in the tobacco and vapor industry are seeing red when it comes to MasterCard registration fees. The caption below, in November credit card processing statements, has many online business owners crying foul and wondering what is next…..
“Effective January 2017, MasterCard requires all merchants in the category of card not present tobacco sales (including vapor, electronic cigarettes, ejuice, mods, etc.) to register and pay an annual fee of $500. Your credit card processor will be deducting your $500 MasterCard registration fees at the end of your December 2016 monthly billing cycle. We will be handling all of the registration process so that no further action will be required on your behalf.”
On the heels of deeming there is a lot of misinformation going around that this is a backhanded effort by the FDA to further punish the Vapor industry. I can tell you emphatically this is not the case. And it is not the case for two reasons:
- The FDA believes it has already destroyed Vapor
- MasterCard is getting decimated by chargeback fees from what are considered “high risk” industries. (Which online vapor falls into)
The term high-risk has one meaning when it comes to big corporations such as MasterCard. It is the amount, above the standard, at which chargebacks occur. In layman’s terms, the industry’s that attract a lot of fraudulent cards and illegitimate refunds add a heavy cost to the MasterCard expense report.
The industry’s that are being impacted are as follows:
- Adult – content and services that are not face-to-face.
- Gambling – not face-to-face
- Pharmaceutical – not face-to-face
- Tobacco/Vapor – not face-to-face (retail vapor and tobacco are not effected by this guideline change)
- Government Owned Lottery
- Skill Games
- Merchants already under the MasterCard Excessive Chargeback Program
These industry types, an annual $500 registration fee must be paid, along with additional compliance measures. Non-compliance can be met with stiff penalties, up to $25,000 per month.
For a full rundown of the Registration Program – Click Here.
“So what are my options?” is a question that we keep hearing. As a business owner in an affected industry you have a couple of options.
- Don’t take MasterCard – your processor can turn off MasterCard in about a day or so.
- Comply – pay the registration and ensure that you are in compliance with the new requirements.
- Comply and save – As an industry endorsed friend to the vapor industry, let us take a look at your account and see if we can save you the money.
WHAT NOT TO DO!!
- Don’t DO NOTHING – The most costly measure as a business is to ignore this MasterCard edict. This is a new model of collection to the credit card industry and will represent a revenue center for MasterCard. Doing nothing will get you caught and potentially put you out of business.
As the endorsed merchant service provider for the Vapor Industry in Minnesota, please let us know if you have any questions about the new MasterCard registration fees or requirements. Just send us an email or use the chat feature in the lower right hand corner of the page.