In 2009, Nathan Shaw founded his online vape business to provide eCig enthusiasts with quality products and juice varieties at a low cost. Like many other merchants, he used Paypal for his internet-based transactions, thinking it was the easiest, most secure way of gathering personal information from his customers.
Over the next eight months, his business grew faster than he could have ever imagined!
Paypal took notice of his increased account activity and called to inform him of their “no tobacco rule.” Nathan of course replied that eCigarettes contained no tobacco, but it was no use.
Paypal decided that eCigarettes did fall into the tobacco category and gave Nathan a short period of time to remove them from his site. This came as terrible news at the worst possible time… in the height of his business. Because of this turmoil, he received numerous emails from upset customers asking when the problem would be fixed – most of them had recently quit smoking and needed his products to stay on track.
Though Nathan ran a solid, above-board business, this terrible plot twist was like something out of a horror film. Trying to resolve the problem, he asked his customers to send him money orders, which only made them frustrated and angry. He tried using Paypal in a different way or other merchant accounts, but was shut down by all of them. As if that wasn’t enough, customs seized his shipments, treating him like a criminal. Though he gave it his all to fix these problems, Nathan’s vape business shut down.
Making lemons into lemonade, Nathan founded VapingCheap.com, an online vape resource which has received a tremendous response from industry newbies and pros alike.
Not all stories like this have a happy ending. So many vape companies are being frozen or shut down and their owners punished for trying to use standard business solutions.
Why is Paypal so bad for vape businesses? Read the fine print.
Paypal is a household name. Relatively easy to use. Secure. But have you ever read their terms and conditions? Most of us skip over that, because we are staying in legal perimeters and shouldn’t have any trouble. However, Paypal has a clause that states:
You may not use the PayPal service for activities that:
-violate any law, statute, ordinance or regulation.
-relate to transactions involving (a) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, (b) drug paraphernalia, (c) items that encourage, promote, facilitate or instruct others to engage in illegal activity…
So even if someone was able to convince Paypal that eCigarettes do not contain tobacco and should not be labeled as such – there is another problem. Technically, an eCig can be used with marijuana – falling under the category of drug paraphernalia. Side note: if you think about it, a spoon could be used as drug paraphernalia, so that rule is a bit crazy….but try telling THEM that.
Bottom line folks: do not use Paypal for your online eCigarette transactions. If using another merchant solution, be sure to read the terms and conditions very carefully. It’ll save you a lot of time, money…and maybe even your business.