If you run a smoke shop, sell cigars, offer vaping products, or operate a CBD business, you fall under the Merchant Category Code 5993.
Maybe you’re frustrated by payment processors turning you away, or you don’t like the label of “high-risk” just for running your business. Let’s break down what MCC 5993 means, why it matters, and how you can get the payment solutions you need without the headaches.
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What Is MCC 5993?
MCC stands for Merchant Category Code. It’s a four-digit number assigned by credit card networks like Visa and Mastercard to identify the type of business you operate.
MCC 5993 specifically refers to Cigar Stores and Stands. But in reality, this code covers a much broader range of businesses, including:
- Smoke shops
- Vape and e-cigarette retailers
- CBD and hemp product sellers
- Tobacco stores
- Hookah lounges (if they sell retail products)
- Shops selling pipes, rolling papers, and other smoking accessories
If your business sells tobacco, cigars, cigarettes, vaping devices, e-liquids, or even certain CBD products, you’ll almost certainly be assigned MCC 5993 by your payment processor.
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Why Are MCC 5993 Businesses Considered High-Risk?
You might wonder: “What makes my smoke shop or CBD store any riskier than a flower shop or bookstore?” The answer comes down to how banks and payment processors view your industry.
1. Regulatory Complexity
Tobacco and CBD products are tightly regulated. Laws vary by state, country, and even city. There are age restrictions, advertising rules, and bans on certain products. Payment processors worry about accidentally facilitating illegal sales, especially online or across borders.
2. Higher Chargeback Rates
Products like vape pens, e-liquids, and CBD oils are sometimes disputed by customers. Maybe because of delivery issues, product expectations, or even buyer’s remorse. This leads to a higher rate of chargebacks, which payment processors see as a red flag.
3. Reputational Risk
Big payment brands want to protect their image. They’re wary of being associated with products that have legal gray areas, health controversies, or negative press. Tobacco, vaping, and CBD all fit that bill.
4. Fraud and Compliance Concerns
Because these products are valuable, there’s a higher risk of fraud from stolen credit cards to fake chargebacks. Plus, the compliance burden (think: KYC, age verification, anti-money laundering) is much heavier for these industries.
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The Impact: Why Stripe, Shopify, and Others Say “No”
If you’ve tried to sign up with Stripe, Shopify Payments, Square, or PayPal, you probably hit a wall. Here’s why:
- Mainstream processors like Stripe and Shopify Payments have strict “acceptable use” policies. They explicitly prohibit businesses selling tobacco, vaping, or most CBD products—even if your business is 100% legal in your state.
- If you try to “sneak in” under a different category, you risk having your funds frozen or your account shut down without warning.
- Even if you’re approved initially, a single complaint or compliance audit can get your account terminated.
In short: If your business falls under MCC 5993, you need a payment solution built for high-risk merchants.
What Is a High-Risk Merchant Account?
A high-risk merchant account is a special type of payment processing account designed for businesses that face more scrutiny, higher chargeback rates, or regulatory hurdles. Here’s how it works:
Why the extra fees and paperwork? High-risk processors take on more liability. They need to protect themselves from potential losses due to chargebacks, fraud, or regulatory fines.
How to Get Approved for a High-Risk Merchant Account
The process is more involved than with a standard account, but it’s not impossible. Here’s what you’ll need:
1. Detailed Application
Be ready to provide:
- Business license and formation documents
- Owner identification and background info
- Previous processing statements (if you have them)
- A clear website with terms, privacy policy, and refund policy
2. Compliance Measures
Show that you’re following all laws and regulations, including:
- Age verification for online sales
- Proper product labeling
- Transparent shipping and return policies
3. Financial Stability
Processors want to see that you’re not a fly-by-night operation. Having a business bank account, some operating history, and clean financials helps.
4. Honesty About Your Products
Don’t try to “hide” what you sell. Be upfront about your full product range. A good high-risk provider will work with you to find solutions.
The Benefits of Working with a High-Risk Processor
It might feel unfair to be labeled “high-risk,” but there are upsides to working with the right provider:
- Fewer account shutdowns: High-risk processors expect your business model and are less likely to freeze your funds.
- Chargeback management: Many offer tools and alerts to help you fight and prevent chargebacks.
- Industry expertise: They understand your regulatory environment and can help you stay compliant.
- More payment options: Accept credit cards, e-wallets, and even alternative payments that mainstream processors won’t touch.
What About CBD Sellers?
CBD is a special case. While hemp-derived CBD is federally legal in the U.S., many payment processors still treat it as high-risk due to the patchwork of state laws and evolving FDA guidance. If you sell CBD, you’ll almost always get an MCC 5993 code, and you’ll need a high-risk merchant account—just like tobacco or vape shops.
Tips for Success in the High-Risk World
- Keep your chargebacks low: Respond quickly to customer issues and use clear billing descriptors.
- Stay compliant: Laws change fast—especially for CBD. Work with a processor that keeps you updated.
- Be transparent: With your customers and your payment partners.
- Choose the right partner: Look for a high-risk processor with experience in your industry, good reviews, and responsive support.
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Final Thoughts
Running a smoke shop, vape store, or CBD business comes with unique challenges—but getting paid shouldn’t be one of them. By understanding your MCC 5993 designation and working with a high-risk merchant account provider, you can accept payments smoothly, stay compliant, and focus on growing your business.
Don’t let the “high-risk” label hold you back. With the right approach, you can thrive in this booming industry—no matter what the banks say.
Ready to take the next step? Find a high-risk payment processor that understands your business, and leave payment headaches behind.
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