Government-backed research shows that cannabidiol (CBD) can provide relief from a wide variety of medical conditions, including pain, seizures, post-traumatic stress disorder (PTSD) and even diabetes. Despite these positive results, many of the most popular banks and payment processors have distanced themselves from CBD merchants, threatening the livelihoods of the nation’s CBD store owners as a result.
Understanding the obstacles that you are likely to face with your new CBD store will help you decide which course of action is right for you and your company.
Banks and Payment Processors
Under federal law, “marijuana” includes, the flowers, leaves, stems, and germinating seeds of the cannabis plant and any products made from those parts of the plant, regardless of whether they contain THC (tetrahydrocannabinol). While this definition is expansive, it does not cover all CBD products on the market. In other words, federal law does not consider all CBD products to be prohibited “marijuana.” This may be why some mainstream retail outlets like Amazon.com and Wal-Mart have offered CBD products.
That said, it is unfair that most banks and payment processors perceive CBD merchants the same as marijuana merchants. Especially after the 2017 announcement of this policy change by Jeff Sessions, mainstream payment providers like Paypal, Stripe, Square and Amazon began cancelling the accounts of thousands of CBD merchants.
Alternatives and Solutions
Many CBD business owners have turned to foreign payment processors in order to keep their doors open. However, these offshore processors often come with difficult terms and higher fees, charging a minimum of five to six percent per transaction, plus hefty transaction fees and monthly fees. Some store owners are even paying as much as eight or nine percent. In addition, reserve requirement can sometimes be as long as 90 days, while payout schedule to merchants is often tied with a minimum payout amount, on a weekly or bi-weekly basis. If the merchant account is temporarily suspended for review or as a protection against potential chargebacks and disputes, both profits and operational capabilities are likely to suffer with these options.
Business owners have even turned to payment aggregators, which bundle several merchant accounts under one. However, this option can be unpredictable, with funding times and payout often exceeding the standard 3-4 business days that most CBD owners expect. In addition, an account can be closed without notice, resulting in the loss of payment processing and any money currently held within the merchant account.
The best solution is to use a domestic processing solution. This way your payment processing costs are low, you get your money faster and your clients get the products they need when they need them most. For a further analysis on the pros and cons of an offshore merchant account vs. a domestic merchant account, click here.
If you are looking for a solution to accept payments for your CBD store, we can help. Give us a call (844) 420-4729 or fill out a short questionnaire and we will reach out to you immediately.
We thrive to provide you the absolute best transaction processing experience merchants in the cannabis space. Any solutions you need, we will get it to you at the best pricing, from credit card processing to point of banking to E-check to ACH and Gift Cards. Not just that, we are constantly developing enhancements at our clients’ requests to help make your business as successful and profitable as possible.
Even when the payment landscape for the cannabis industry constantly changes, you deserve to be able to utilize actionable payment insights can be combined with your existing decision tools/metrics to maximize values added to your business, just like any other traditional industry. We help you make it happen, assisting you take appropriate measures and actions to accommodate their payment needs while also remain compliant, protected, and cost-effective.
Customer support has been key to getting us where we are today, and will continue to be at the core of business. We want your business for many years to come. That is why all of our support is done in-house. Anything you need, ask away anytime. Our support team is there for you whenever you need us.