Tobacco & Cigar

Why Tobacco & Cigar businesses are considered High-Risk?

Tobacco and cigar merchants face unique challenges when selling their products online. These challenges can be grouped into several categories:


  • Customers may dispute transactions with their credit card providers, resulting in chargebacks.
  • Chargebacks can be costly for merchants and can damage their reputation if they occur frequently.

Regulatory Compliance:

  • The sale of tobacco and cigar products is subject to strict regulations in many countries.
  • Compliance with these regulations can be complicated and time-consuming.

Age Verification:

  • In many jurisdictions, it is illegal to sell tobacco and cigar products to minors.
  • Age verification is crucial in online sales to ensure that only legal-aged customers make purchases.

Fraudulent Purchases:

  • The possibility of fraudulent purchases is a significant concern for tobacco and cigar merchants.
  • Fraudulent purchases can lead to financial loss and harm the merchant’s reputation.


To mitigate these risks, tobacco and cigar merchants must take extra precautions when selling online. Working with a payment processor that specializes in high-risk merchants can help reduce these risks and ensure compliance with regulatory requirements. 

What are mitigation measures for Tobacco & Cigar merchants to reduce risks when selling online​

  • Work with a High-Risk Payment Processor: Tobacco and cigar merchants should work with a payment processor that specializes in high-risk businesses. These payment processors have experience working with businesses in the tobacco and cigar industry and can provide customized solutions to reduce the risk of chargebacks, fraud, and other financial risks.
  • Implement Age Verification: Tobacco and cigar merchants should implement age verification systems to ensure that only legal-aged customers make purchases. Age verification systems can include asking for a government-issued ID, a credit check, or an age verification service.
  • Monitor Transactions: Merchants should monitor transactions closely to identify any suspicious activity, such as unusual order patterns, unusual shipping or transactions that are significantly larger than average.
  • Use Fraud Detection Tools: Merchants can use fraud detection tools to analyze transactions for signs of fraudulent activity. 
  • Maintain Compliance: Merchants must maintain compliance with regulatory requirements. This includes complying with age verification laws, marketing restrictions, and other regulations that apply to the tobacco and cigar industry.

Being a high-risk merchant vs. a regular merchant

  • Higher payment processing fees
  • Lengthier application process
  • Higher chargeback fees
  • Cash reserve requirments:
    • Capped reserve
    • Rolling reserve
    • Upfrom reserve
  • Volume caps
  • Additional technical requirements
  • Being on the TMF / MATCH list


Check out our knowledge hub to learn more about what processing fees, application process, chargebacks and cash reserve requirements or TMF / MATCH list mean. 

Other risk factors?

There may be other risk factors as to why you as a Tobacco & Cigar merchant are classified as a high-risk merchant, such as:
  • Accepting subscription-style payments

  • Being on the Member Alert to Control High-Risk Merchants, or MATCH list — a list managed by Mastercard that monitors merchant behavior, like chargeback history

  • High average transaction sizes

  • High sales volumes

  • Highly regulated industries

  • International sales

  • Large number of card-not-present transactions

  • Little to no business experience

  • Long fulfillment time frames

  • New or poor credit scores

  • Past fraud or illegal activity


As high-risk Tobacco & Cigar merchant how to find a payment provider?

It takes effort for businesses to secure a payment processing partner when they are considered high-risk but it is definetly possible to find the right payment solution if you focus on:

  • Maintaining healthy cash levels. Most processors would like to see a healthy cash level in your business bank account. 
  • Try to reduce chargebacks. There could be a number of factors behind the soaring number of chargebacks in your business. Whatever the reasons may be, you can always analyze them and try to reduce your chargebacks.
  • Be transparent. Disclose all materials and relevant information during the application process. Payment processors may ask you for very detailed information about your business and finances. Be open, honest, and transparent.
  • Keep your documents ready. This could mean having six months of bank statements and a few years of tax returns. That said, each processor has its own set of requirements so make sure to check them.
  • Follow the guidelines of your payment processor. When you apply for a high-risk payment solution, besides your business needs, the risk the payment solutions provider takes also matters. So, be flexible and see if there are things you can do to reduce your risk by discussing with them and following their recommendations.

Our Platform will find the right payment solution for your business

Our biggest differentiator? 

We provide payment solutions for merchants with a 90% Succes Rate by Algoritmic matching and pre-KYC onboarding in each industry and region globally.