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8 Common Misconceptions About Alcohol Payment Regulations
Heavy alcohol payment regulations have a significant impact. Learn more about 8 common myths and misconceptions in the industry.
When it comes to wholesaling, manufacturing, retailing, or shipping alcoholic beverages, there can be complex regulations a business must follow in order to stay in business and reduce non-compliance risk. These regulations can often be overwhelming, leaving businesses with only one or two options for payment processing, manufacturing, or distribution.
While heavy regulations are a significant part of the alcohol industry, there are several myths and assumptions. Here’s what they really mean so you can reduce non-compliance risk when it comes to your alcohol sales.
1. Federal Regulations Are All A Business Has To Worry About
According to the "Wilson Act" (US Code Title 27, Chapter 6 Section 121), the transportation of alcohol into any other state in the Union is subject to the receiving state’s laws. The 21st Amendment to the Constitution also gives states control of the following:
- The sale of alcohol within the state
- The distribution of alcohol within the state
- The importation of alcohol into the state
- Statutes regarding who can possess alcohol within the state
As your business grows, the laws of the new states you operate in, including some local jurisdictions, 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. While each of these entails varying degrees of state and federal licensing and regulations before starting, each type of business has the opportunity to operate within this industry.
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4. 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 expertise have met the FTC (Federal Trade Commission) and TTB requirements for alcohol payments processing and are offering more and better solutions to the industry. Whether you are selling directly 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.
5. Regulations and Licensing Are Not That Important
Regulations and licensing are still an essential part of any business's operating infrastructure if they accept payments for alcohol products. As seen in point 1, states can and do pass laws that govern the sale and distribution of alcohol. Knowing what your state requires for licensing is key to your business's success. As shown in Kansas, a simple move to grant liquor licenses to grocery stores never left committee: regulations will be a part of business for the foreseeable future.
6. The COVID-19 Pandemic Restrictions Stalled the Market
Although restaurants, bars, and breweries have closed down or limited in-person service due to the COVID-19 pandemic, sales in the industry have shot up. Research shows that the beverage business is resilient in the face of recessions, and while the sales distribution during COVID-19 looks different than the past, it still trends up. Restaurants and bars pivoted to online services, and customers are eager to both enjoy their favorite cocktail at home and support local businesses. The restrictions, by no means, have deterred people from buying their favorite drink; the method just looks different.
7. There is Only One Alcohol Payment Category in the United States
There are actually three alcohol categories to keep in mind when it comes to payments:
There are 7 cash states, 16 term states, and the rest are a mixture of both. Within each group, alcohol payments and regulations are either the same or similar. Cash means only immediate payment upon delivery is acceptable. Term states accept some form of credit accounts with certain terms. Mixed states offer a little of both, separated by beer as one category and wine and spirits as another.
To learn more about alcohol regulations by state, click here to download the infographic.
8. Cash On Delivery is the Only Form of Payment for Alcohol
In a constantly growing industry, cash on delivery (COD) is not the only form of payment for alcohol anymore. Electronic funds transfer (EFT) has become a common way to complete payments. EFT operates electronically and is a transfer of funds from one bank to another using the Federal Reserve clearing system.
EFT payments are especially popular and widely used for beer transactions because beer sells in much higher quantities and greater demand. Compliance with federal and state law is often built into the EFT system. Plus, it saves time during delivery and is more secure.
These are some of the myths that innovative businesses face every day in the realm of alcohol regulations. For information on management systems and what they can do to help businesses like yours meet Federal regulations, including payment processing, get in touch with 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 payment process solution.
How to Stay Compliant with Alcohol Regulations in 2021
Download our ebook and learn how you can stay compliant with alcohol regulations in 2021 and beyond.