Selling Alcohol Online 101: accepting credit cards and more
Please note, this is not a legal advice website. We are not a law firm. We provide e-commerce services like high-risk payment gateways, merchant account recommendations, and fraud reduction advice to businesses looking to sell alcohol and other restricted products online. We also offer general high-risk e-commerce vendor recommendations. Please read more about us on our home page and our about us page.
Below is a quick contact form if you need some high-risk payment gateway or processor suggestions for Shopify, WooCommerce, or another shopping cart, and below that is some detailed information on the ins and outs of selling alcohol online.
Payment processing for wine, beer, or spirits websites
If you are simply looking to learn more on the topic of online alcohol sales, please scroll down below the form and keep reading.
General information on alcohol and e-commerce
If you are still in the beginning stages and simply looking for some general information on the basics of selling alcohol online then continue reading below. We have put together a pretty informative outline for new e-commerce alcohol websites to reference. Please note the information below is, well, for informative purposes only. To get legal advice, which if you are planning on selling alcohol online you absolutely need, you must contact an attorney or reach out to us for an attorney recommendation.
Looking for an attorney that knows the alcohol business?
Again, that’s now us. We are not lawyers and don’t provide legal advice. But, luckily we know lots of folks and are always happy to pass on a name. You can also browse the National Association of Alcoholic Beverage Licensing Attorneys by clicking here and contact a few attornies in your state that specialize in alcohol sales.
Alcohol e-commerce websites: the times are changing
Family-run wineries, craft breweries, and micro-distilleries have existed for centuries, born out of a passion for quality, innovation, and customer service. Like other crafts, they have historically enjoyed a mostly local clientele. However, with the e-commerce boom, these small passion-enterprises, which could not traditionally compete with larger mass-manufacturers in terms of reach or advertising dollars, now have the opportunity to raise their business to an entirely new level. Although selling alcohol on the Internet, like selling locally, brings some unique challenges a proper understanding of the process coupled with strategic partnerships with shopping carts, payment gateways, software companies, payment processors and service providers can help you turn your micro-brewery or family vineyard into a mega-success.
Why sell online?
Let’s again mention the obvious. Nothing on this website is legal advice. Consult with an attorney before making any decisions which might affect your legal rights. If you are not clear about whether something affects your legal rights, be cautious and talk with a lawyer before taking any action.
If selling locally was good enough for your father, his father, and his father before him, why change your approach? In short, because your customers already have.
E-commerce allows small wineries, breweries, and distilleries a previously unimaginable opportunity to sell on a national level without the advertising budgets of their larger multi-national competitors.
How to get started selling alcohol online
Direct shipments from your winery, brewery, or distillery require you to comply with all federal laws concerning alcohol retail sales, the laws of your state, the laws of the state to which you want to ship, and the regulations of the shipping companies. Since these laws are continuously changing, and this page will not necessarily be 100% updated with every relevant fact, law, and regulation we highly recommend that you seek qualified legal counsel about questions regarding your business and shipping policies. However, a solid foundation for your online business will likely include some or all of the following:
Form TTB F 5630.5d, which can be accessed here, “Alcohol Dealer Registration” submitted and approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB)
A winery, brewery, or distillery license from your state of residence
A retailer’s license from your state of residence Note: different licenses may apply to internet retailers. Do not assume that because you can sell locally, your license gives you the right also to sell online.
A shipper’s License for each state to which you want to ship. (Note: one license does not necessarily cover all types of alcohol. Make sure your shipper’s license entitles you to ship all the types of alcohol you sell).
Direct shipping agreements from all carriers you wish to use (Note: as of March of 2015, it appears to us that it is still illegal to ship alcohol through the U.S. Postal Service per 18 USC 1716).
In addition to meeting these regulatory guidelines, you will need to be simultaneously working on “how” to sell your goods online. While a good internet business is more than merely the sum of its parts, it should include at least all of the following:
An e-commerce website
E-commerce sites are distinct from other websites in that they allow you to display products and product information for your consumers in a familiar, easy-to-use format. They also include a shopping cart, which allows your customers to save the items they wish to purchase as they shop, then seamlessly link to your payment gateway to complete the sale.
A payment gateway that works with your choice of shopping cart
In order to accept a payment, you must be able to process a credit card. This requires the use of software called a “payment gateway.” Such software helps your processor connect to the customer’s bank to initiate the transaction and pass that data back to your merchant account or processor to deposit the funds. For most clients, we recommend NMI/ Network Merchants, eProcessing Network/ EPN, or Authorize.Net. Payment gateways are also used to store sensitive cardholder data, manage fraud filters, implement monthly recurring “club” billing plans and reduce your liabilities by keeping credit card numbers on their servers – not your web host’s servers.
An alcohol friendly merchant account
A merchant service provider is one of the most important pieces of the payment puzzle. Because online businesses – particularly those that deal in adult products, such as alcohol – are considered high-risk businesses, not all service providers or all banks will accept you as a customer. However, without these components, you will not be able to accept credit or debit card payments online.
We can help you choose the right shopping cart for your website if needed, pair you with a payment gateway, and recommend an alcohol-friendly e-commerce merchant account that will meet your needs. We specialize in helping high-risk clients by understanding their industry as it relates to e-commerce and base our recommendations on your specific needs – not just your product category. If you are thinking about selling alcohol online you should contact us early in the process. We love working with start-ups and can often save you a lot of time and frustration by pointing you in the right direction – out of the gate.
State rules – banking and shipping
Because banks need to minimize their risk, you may need to provide proof that you are operating your business legally and ethically, as well as taking all necessary precautions to minimize your risk, in order to be accepted for a payment gateway fully integrated with a merchant account. We take all these things into consideration as well – especially your attention to state regulations concerning alcohol shipments.
Although we are not attorneys, let alone constitutional scholars, it does appear that according to the 21st Amendment to the Constitution, it is clearly illegal to ship alcohol into any state in a way that violates state law. For wineries and micro-breweries, this means that you need to be familiar with the direct shipping laws for all the states and territories in which you do business, we strongly suggest you consult an attorney well versed in your industry. These laws can be complex and may include guidelines for some or all of the following:
Some states require you to have one or more permits in order to ship across state lines. Most commonly, this will include a shipper’s license, although in some states you may also be required to purchase a retailer’s license.
States of origin
Some states allow direct shipments from any other state; others only allow shipments from reciprocal partners – or those states who allow their citizens to purchase alcohol from them. Wineries may or may not be exempt from these laws, and on-site exceptions may or may not apply.
Type of alcohol sold online
Most states only allow wine shipments; however, some allow wine and beer, while others allow alcohol of all types.
Type of business
Some states only allow wineries to engage in direct shipping. Others allow retailers to participate. In some states, wineries must produce less than a certain quantity of wine annually in order to qualify, while in others production is irrelevant.
Some states that do not allow regular direct shipping do allow wineries to ship if the customer purchased the wine in-person while visiting the winery (this is called an “on-site” purchase). In other states, on-site orders may influence the amount of wine that can be shipped and received by a customer at one time.
Manner of shipping
Most states that allow direct shipping permit business to mail the wine directly to the consumer. However, a small number of states require retailers to first ship the wine to a wholesaler who will forward the shipment to a retailer, who will deliver it to your customer. In states, such as Delaware, where direct shipping is prohibited except for on-site purchases, the winery may need to use private carriers, since common carrier shipments are prohibited.
The quantity of alcohol that can be shipped at one time varies widely by state, from unlimited to regulated by month, year, or quarter. In states that allow alcohol shipments other than wine, the acceptable quantity of each type of alcohol may be different.
Prohibited zip codes
Some states have “dry communities,” which may be as small as an individual town or as large as an entire county where alcohol sales are prohibited.
Before shipping to any state, visit the alcohol beverage authority’s website to review their list of links to current alcohol regulations on a state by state basis. The TTB has compiled links to each state on their page “Alcohol Beverage Authorities in the United States, Canada, and Puerto Rico.”
Additional shipping considerations
One of the biggest challenges facing high-risk businesses is obtaining and keeping a merchant account. Some service providers simply refuse to take the risk. TaskerPaymentGateways.com provides alcohol friendly payment gateways, and as such we understand these businesses and can assess their true situation and recommend processors and banks that are amenable toward their industries. However, even once you’ve obtained a merchant account, excessive chargebacks can get it shut down.
One of the leading causes of chargebacks is when a customer orders a product that he does not receive. With alcohol, this is an area of particular interest, since direct shipments cannot simply be left on the doorstep. To minimize the number of unhappy customers, lost shipments, and damaging marks against your merchant account, keep the following shipping considerations in mind:
Most carriers require shipper’s agreements
To ship wine, beer, or liquor through the major carriers, you will need a signed and approved shipper’s agreement. This process proves that you are a licensed and authorized alcohol dealer and allow the carriers to grant you special privileges to ship some or all types of alcohol.
Not all carriers ship all types of alcohol
Just because you have a shipper’s agreement does not mean you can ship all alcoholic beverages. Many carriers only allow you to ship wine. If you need to ship beer, or hard liquor, inquire with the carrier before you begin online sales. You may need to employ separate carriers for wine and other types of alcohol.
All alcohol shipments must be clearly marked with a special shipping label
All major carriers require you to affix a shipping label to the package that clearly identifies it as containing alcohol. The purpose of this label is to notify the delivery person that he or she must obtain a signature in order to leave the package.
An adult signature is always required upon delivery
In all states, 21 is the legal drinking age. Selling or providing alcohol to a minor is a crime and can result in stiff fines, prison time or both. Requiring an adult to sign for the package helps keep you in compliance with these laws.
How Tasker Payment Gateways LLC can help
We offer a consultative approach. We start with a payment gateway recommendation that fits your business model. We then discuss any other features you may need including chargeback prevention, recurring billing features for “wine of the month” type clubs, and customer data storage. We can help by leveraging our relationships with merchant service providers and acquiring banks to advise you on selecting a merchant account that is right for your business. We can also help you choose a shopping cart that’s compatible with your merchant provider and gateway, and advise you about the best practices that can help you reduce chargebacks. Information on this topic changes all the time, please keep an eye on our blog and follow our social media pages to stay up to date.
PLEASE NOTE: The information and materials on this page/site are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances.
If you’re ready to make the leap into online sales, or if you are not ready yet and have some preliminary questions please call us today at 207-772-8737 or contact us online. We’re always happy to help!