The iControl Blog

7 Common Misconceptions About Alcohol Payment Regulations

17 August 2016

7 Common Misconceptions About Alcohol Payment Regulations

When it comes to wholesaling, manufacturing, retailing, or shipping alcoholic beverages, there can be complex regulations a business must maintain compliance with in order to stay in business. Many times these regulations can be overwhelming, leaving businesses with only one or two options for payment processing, manufacturing, or distribution. 

Although heavy regulations are a significant part of the alcohol industry, the following are 7 myths which dispel some of the more popular assumptions about the alcohol industry. 

SEE ALSO: Why The Alcohol Industry Needed an Electronic Payment Option

1. Federal Regulations Are All A Business Has To Worry About

According to the "Wilson Act" (US Code Title 27, Chapter 6 Section 121), transportation of alcohol into any other state in the Union is subject to the laws of the receiving state. As your business grows, the laws of the new states you operate in will govern your business processes and are an essential part of your alcohol payment planning. 

2. My Business System Is My Own

In most businesses, the system you use to market, accept payments, and build your business are your own. Alcohol is not most businesses. From consignment sales (illegal) to the method you use to market your product and sell it, there are many policies in place that must be adhered to. The Tax and Trade Bureau currently regulates and enforces federal law regarding Alcohol sales and can have a significant impact on how you manage your business.

3. Alcohol Sales Is Only For Certain Kinds Of Businesses

Although there are many regulations, multiple types and sizes of businesses are involved in the resurgence of small breweries, wineries, and distilleries. Distributors, warehouses, manufacturing, food services, retail establishments, and wholesalers are all parts of the marketing and distribution chains for alcoholic beverages. Although each of these entail varying degrees of state and federal licensing and regulations before starting, each type of business has the opportunity to operate within this industry. 

4. Current Regulations Do Not Favor Competition

The Ohio legislature is currently considering removing a cap on the amount of alcohol allowed in craft breweries, in order to remain competitive with the states surrounding Ohio (Pennsylvania, Indiana, Kentucky, and Michigan) according to the Columbia Dispatch. This shows a trend that is picking up momentum across the states to move alcohol regulation into the marketplace. 

5. There Is Only One Processor Who Complies With Regulations

While options for electronic alcohol payments processing has traditionally been limited, companies with over a decade of payment processing expertise in other industries have met the FTC (Federal Trade Commission) and TTB requirements for alcohol payments processing and are offering more and better alcohol payment solutions to the industry. Whether you are selling direct to consumers, offering alcohol as part of your food service, manufacturing, or wholesaling, there is more than one option for electronic payment processing to meet your needs. 

6. Regulations and Licensing  Are Not That Important

While news like point number 4 may convince alcohol retailers, wholesalers, and manufacturers that the regulatory environment is becoming less influential, regulations and licensing is still an essential part of any business's operating infrastructure if they accept payments for alcohol products. As shown in Kansas recently, a simple move to grant liquor licenses to grocery stores never left committee: regulations will be a part of business for the foreseeable future. 

7. There Is No Room For Growth In A Saturated Market

As reported in Yahoo! News, the growth in the alcohol industry is being driven by higher priced premium and craft products in all three alcohol categories (beer, wine, liquor). Although the big companies compete in these categories, the higher price point defrays some of the economies of scale you see with mass-produced beers like Miller, Coors and Keystone. This empowers craft producers to design a brand and to build that brand into a competitive identity. 

SEE ALSO: The Benefits of Electronic Payments in the Beer Industry Could Be Worth Billions

These are some of the myths that innovative businesses face every day in the realm of alcohol regulations. For information on management systems for businesses which meet Federal regulations, including payment processing, please contact iControl. We provide retailers and distributors with an alcohol payments solution that is convenient, compliant and secure - at a fair price.

Click here to request your demo of iControl's alcohol payments solution and patent-pending Next-Generation Reconciliation™.

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