Retail and wholesale businesses seeking online alcohol merchant accounts often encounter difficulties in finding a reliable payment processor. This challenge is prevalent whether it’s a small craft beer brewery or a large corporation dealing in a range of alcoholic beverages. Paywise Solutions works with such merchants to provide affordable and stable alcohol payment processing services for credit cards, debit cards, and ACH transactions.

Paywise Solutions, through its network of banks, assists merchants that other payment processors might not be able to work with. In the high-risk alcohol industry, merchants require a partner that can offer consistent and cost-effective payment processing services. Utilizing our network, Paywise Solutions establishes financial relationships specializing in high-risk merchant account services.

Online Alcohol Credit Card Processing

Similar to the tobacco industry, alcohol sales are heavily regulated with strict age restriction guidelines. Understanding the different requirements for alcohol sales can simplify the sales process and reduce the merchant’s potential liability.

With a thorough understanding of laws and proper verification methods, Paywise Solutions can help businesses grow without concerns of legal issues. As the risk of underage sales is a significant concern, merchants struggle to prevent minors from circumventing the system. Enhanced verification and authentication programs are boosting the confidence of merchants selling online. The implementation of digital signatures and online age verification programs is significantly improving the safety and security of the alcohol e-commerce industry.

Requirements for Online Liquor Credit Card Processing

Payment processors accepting alcohol businesses will have additional guidelines for merchants to complete before account approvals. Most financial institutions will provide a list of legal documentation along with internal documents required by the payment card networks. Most general e-commerce merchant services companies are hesitant to take these risks and may not be able to properly set up this business model.

A thorough underwriting process is crucial to prevent future problems. Payment processors are required to register their alcohol businesses with the payment card association as a card-not-present merchant. This involves a yearly fee to cover costs incurred through major payment networks. In addition to registration, many processors also require merchants to seek a legal review by a third party to ensure full compliance with all laws.

One of the final steps in the underwriting process is a review of the merchant website. Underwriters will confirm the use of an age-verification program to control alcohol sales and limit underage sales. Payment processors will also verify that merchants are charging sales tax during the checkout process, eliminating another potential legal issue.

Why are Online Alcohol Sales High Risk?

Due to the high regulation of the alcohol industry, payment processors are often reluctant to work with these businesses. The costs stemming from issues with alcohol merchants often outweigh the benefits for many financial services companies. While merchants are required to be licensed and maintain age-verification programs on their websites, most processors still hesitate to accept them.

Along with strict age restrictions, merchants are also scrutinized for collecting sales tax. As a crucial aspect of alcohol sales, payment processors can be affected if proper sales tax is not collected. In addition to verifying sales tax in shopping carts, many payment processors require merchants to complete additional documentation for legal purposes surrounding sales taxes.

Some alcohol resellers offer membership programs that bill on a preset frequency. These business models generally experience higher than normal chargebacks and returns. When a payment processor reviews such a merchant account, these concerns usually classify it as a higher risk business type. If approved, it often requires a reserve or sales verification.

Another issue preventing payment processor approval for an alcohol merchant is the infrastructure and inventory required to properly sell and process orders. As a capital-intensive business, merchants need to package and ship orders promptly. This concern has translated into challenges for smaller merchants that cannot process sales as efficiently as larger distributors.

Reasons Alcohol Merchants Experience Chargebacks

Chargebacks can occur for various reasons. A common issue for merchants in the alcohol industry is buyer’s remorse or a consumer deciding they no longer want the product after purchasing. Some customers may opt for a chargeback rather than requesting a refund. While generally not the merchant’s fault, it incurs extra fees and expenses.

Shipping issues can also be a significant factor behind chargebacks. Delays in delivery can prompt customers to demand refunds or even initiate chargebacks. While not common for most merchants, it can become a problem and create concerns for processors.

Customers entering into membership or buying club agreements with an alcohol merchant have also been a reason for concern. These billing models can create confusion and discontent over time. Many consumers do not fully understand the agreement they are entering into or do not know how to cancel. High refunds or chargeback rates draw additional attention from payment processors to these businesses.

Preventing Chargebacks with Alcohol Sales

Businesses aiming to safeguard against chargebacks can adopt several methods to reduce potential losses. While no method is completely foolproof, there are strategies merchants can follow to lower the likelihood of chargebacks.

One of the simplest ways to prevent issues is to provide customers with clear terms of sale. This can be done by requiring customers to acknowledge they understand the terms in the shopping cart before checkout. While many may still not read the terms, it might help merchants prevent some potential problems.

ID verification is another method to limit chargeback threats. Though mandatory for online liquor sales, recording customer information can deter some consumers from initiating chargebacks. Associating extensive consumer information with a customer might make them less likely to chargeback since the merchant has their details. While online alcohol sales lack the personal touch of retail sales, consumers might be more inclined to work with the merchant than in a more anonymous transaction.

Expediting the packing and shipping process after an order is placed can also help reduce losses. Slow handling or delayed shipping can frustrate customers, leading to demands for refunded sales. In some cases, customers will contact their bank and request a return of funds to their payment card. While not all merchant problems can be prevented through these steps, some instances can be stopped before becoming costly.

The Growth of Alcohol

The alcohol industry is a multi-billion-dollar segment with annual sales exceeding significant amounts. The demand for alcohol continues to increase year over year, with changes in consumer tastes and habits. Beer consumption has shifted from mainstream brewers to craft brewers, with spending on beer increasing as the average price for a case of beer rises. This generational change has led to the creation of numerous local and regional breweries.

The wine and hard alcohol industries have also seen increased popularity. As consumers have turned to more niche drinks, the rise in specifically crafted spirits has carved out its own industry. The demand for both wine and hard alcohol has led to an overall rise in costs associated with these alcohols.

It’s crucial for brewers, wine, and spirit makers to evolve with today’s consumers. Drinkers are willing to pay more for a specific drink rather than settling for a cheaper alternative. This trend has been a driving factor behind the growth of online sales by producers to sell directly to consumers or through distributors.

Benefits of Alcohol Sales with Paywise Solutions

Merchants in the online alcohol industry need to partner with a payment processor familiar with their needs. At Paywise Solutions, we understand online alcohol businesses and many of the problems and concerns facing the industry. Merchants with online beer, wine, or hard alcohol companies are encouraged to contact our sales team for additional information about selling online. We are happy to answer any questions or help solve problems with your current merchant services program.