Experience Seamless Financial Services!Why Is It Hard for Vape Businesses to Open an Account?
Over the past few years, vaping has emerged as an alternative to traditional tobacco, making the vaping market substantially grow in no time. In spite of tremendous growth, there are several vape business banking challenges that can hinder financial operations. Unlike other retail businesses, the vape sector is categorised as high-risk, resulting in additional obstacles in opening and running a business account. This blog explains the vape business banking challenges in detail and suggests alternate options to avail financial services for high-risk industries like the vape industry.
Among all the other vape business banking challenges, opening a business banking account is the most uphill battle. Let’s dive deep into the factors that are responsible for making it difficult for a vape business to get an account.
1. Regulatory Uncertainty
Banks are bound by regulations and are required to comply with all of those, such as anti-money laundering, to prevent financial crimes. However, the vaping industry is relatively new; hence, financial regulation for vape businesses is still evolving, causing uncertainty and making it hard for banks to assess the potential risks. Therefore, it becomes challenging for banks to adhere to the ever-changing policies and regulations to avoid any legal repercussions.
2. Credit Risks
Another reason for vape business banking challenges is the industry’s volatility. Vape businesses are more prone to market fluctuations due to regulatory crackdowns, creating uncertainty regarding their ability to pay back loans to banks. Moreover, vape businesses are even more susceptible to chargebacks due to issues like underage and online sales, raising the credit risk as a result of more financial uncertainty in the business.
3. Reputational Risks
Vape business banking challenges can be rooted in banks’ hesitation towards this industry for reputational reasons. The vaping industry has negative public perceptions due to the associated health risks. Banks are cautious about the reputational damage that could be incurred by associating with the vaping industry. Therefore, banks avoid having any ties with it to protect their public image.
In conclusion, vape business banking challenges are deeply embedded in the cumulative effect of financial regulation for vape businesses as well as credit and reputational risks. All these three factors together create a situation where it becomes too risky for banks to allow vaping companies to open a business banking account and availing their financial services. Therefore, getting access to reliable financial services becomes too daunting for vaping businesses and requires strategic and diligent efforts to get suitable alternative options for financial management.
What are Alternative Options for Vape Businesses?
Despite all these vape business banking challenges, you can still find solutions to process your business payments seamlessly. Although options are limited as it is considered a high-risk sector. To deal with ever-evolving financial regulation for vape businesses, here are a few alternatives which can help you keep your business moving without any disruptions:
• Online Payment Platforms:
There are several online payment platforms that can easily integrate with your online store to process e-commerce payments. However, these platforms might have higher transaction fees for high-risk businesses.
• Credit Unions
Credit Unions can also help vape businesses navigate financial regulation, as they provide flexible banking services at lower fees, even for high-risk businesses. However, one drawback of credit unions is that they offer a more limited range of services compared to large traditional banks.
• Financial Service Provider:
Try finding a reliable financial service provider such as Wirewand that can cater to your business banking needs without charging a higher fee or requiring additional scrutiny. Wirewand provides comprehensive financial solutions to businesses of all sizes and domains so they can seamlessly send and receive payments globally.
Why Your Business Needs Wirewand?
In light of the UK’s new legislation, financial regulation for vape businesses and strict policies, it is best for vape businesses to address compliance and banking challenges proactively. Wirewand can help your company navigate through these hurdles by becoming your reliable financial partner and providing you with a multi-currency account to help you streamline your financial operations. We offer competitive rates, a transparent fee structure, 24/7 support and faster payment transfer solutions to allow your business to operate efficiently.