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November 26, 2016 Banzai Vapors

MASTERCARD REGULATES VAPE

Who knew that MasterCard could have just as much impact on regulating the vape industry as the FDA? Last week, MasterCard sent out an email updating it's policy with vape companies that process their cards. Here are the main points of the email and how you are affected:

EXORBITANT REGISTRATION FEES 

MasterCard is now charing a $500/year registration fee to vape companies. Even if you have a great chargeback record and have been processing for years. Why you ask? Because why not?

DOUBLING OR TRIPLING SHIPPING COST 

For normal size orders, you can expect to pay $3-$7 in shipping charges. With the requirement of Adult Signature Required, you shipping could double. USPS (one of the most convenient ways to ship) charges $5.95 for Adult Signature. UPS charges $5.25 and Fedex charges up to $4.75. If you are not home to sign, then you will have to plan a trip to the shipping company.

NEW VAPING AGE 21

Are you between the age of 18-20 and reside in a state that allows you to legally vape? MasterCard has taken away your ability to order online. With their requirement of Adult Signatures on delivery MasterCard has effected raised the age on vaping single handedly. You must be 21 or over with a valid government issued ID to sign for a USPS, UPS, and FedEx package with Adult Signature Required. 

I KNOW WHAT YOU'RE THINKING

"I can start using my Visa debit card or Amex credit card." Well unfortunately, the online software that vape sites use cannot determine the type of card you are using and add an additional cost per that credit card type. Thus, all transactions will need to follow this new procedure. 

Take action and sign our Petition to Reverse MasterCard's Anti-vape Policies on Change.org.

Here is a copt of the email sent to credit card processors last week.

Effective August 2016, MasterCard revised their Business Risk Assessment and Mitigation (BRAM) compliance program to include electronic nicotine delivery systems, such as e-cigarettes and vape pens. This revision was made in light of the recent extension of the US FDA’s authority to all tobacco products including electronic nicotine delivery systems a.k.a. ENDS (such as e-cigarettes and vape pens), liquids, nicotine gels, and more.
In order to avoid potential BRAM violations, a review of all existing and new e-cigarette and vape merchants must be conducted to ensure that the following requirements are met:
  • Age Restrictions are implemented– merchants must perform physical age verifications in stores and electronic verifications online
  • Merchant Category Code (MCC) must be 5993
  • Merchants must meet all new FDA requirements for labeling, marketing, advertising, promotion, and manufacturing. More information on FDA requirements can be found here: www.fda.gov/TobaccoProducts
  • Ensure merchants selling e-cigarettes and vape products meet all state and federal law requirements. Please note that state laws may vary. More information can be found here: http://publichealthlawcenter.org/resources/us-e-cigarette-regulations-50-state-review
  • Additional requirement for Card-Not-Present (e-commerce and mail order/telephone order) e-cigarette and vape merchants:
    • Registration will be required with MasterCard which costs $500/year per merchant, effective January 15, 2017
    • Merchant must have a health warning label visible on the website on the harms of nicotine usage
    • Adult signature required upon delivery
    • Billing terms must be clearly disclosed on the merchant’s website
Each merchant will require the following in order to be eligible for registration:
  • Legal Compliance Verification – This is a written opinion from an independent, reputable, and qualified attorney or accreditation by a recognized third party, i.e. FDA, TVECA, or state agencies. The Legal Compliance Verification must indicate that the merchant’s business practices have been reviewed and comply fully with all laws applicable to the merchant’s business type.
  • Acceptance of an annual $500 registration fee required by MasterCard; an approved agreement will be available for merchant signature.
  • Implementation of real-time batch procedures to monitor continually simultaneous multiple transactions using the same account number and consecutive or excessive attempts using the same account number.
  • Merchant must maintain a total chargeback to interchange sales volume ratio below ECP thresholds.
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