Short answer: Square's current terms prohibit remote sales of age-restricted products such as tobacco, allow account termination at any time for any reason, and permit reserves at Square's sole discretion. Merchants in these verticals routinely report declined applications, sudden holds, and deactivations. The longer answer is worth five minutes, because most owners find out at the worst possible time.
Square's payment terms, last updated July 30, 2026, prohibit internet, mail, and phone sales of age-restricted products such as tobacco, and separately prohibit "paraphernalia that may be used for illegal activity," which is how a shop's glass gets classified. The words e-cigarette and vaporizer no longer appear in the terms at all. What the terms do spell out: Square may terminate your use of the payment services at any time for any reason, and may hold a reserve that it can raise or extend in its sole discretion. The language shifts across updates, which is why merchants who were "fine for months" suddenly are not: the review that finally reads your inventory happens against whatever the terms say that day.
Square approves fast, and the pattern merchants describe is light checks upfront with the real scrutiny coming later. For a coffee shop, that trade is invisible. For a vape or tobacco retailer, merchants report the real underwriting happening after you already depend on the deposits, when a transaction, a product name, or a chargeback ratio trips a review. An approved application does not mean your products are allowed under the terms.
When a review lands badly, the published terms allow held funds and reserves while things are sorted out, and deactivation with your balance released on a schedule. All of it is in the terms you clicked through at signup. The problem is discovering the deal mid-cash-flow, with a line at the counter.
You have two workable paths. One: stay on a mainstream processor, keep restricted goods off that catalog entirely, and accept the ceiling. Two: process with a provider that boards your vertical on purpose, where the underwriting happens before your first sale instead of months down the road. That second path is what PandazPOS is built for: your vertical is disclosed and underwritten before your first sale, free counter hardware, and terms you read before you sign.
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