The legal cannabis market continues to expand year over year. With more rapid changes, cannabis merchants want to see more growth throughout North America, which will require acceptance of additional channels of payment. Even in 2021, many banks are not open to risk-averse payment processing — which can make accepting payments such as reloadable gift cards much more difficult.
Many merchants are concerned about how they can facilitate customer payments in the cannabis space. Apart from getting approval for a cannabis merchant account and meet prerequisite credit card processing requirements, merchants want to weigh the effectiveness of reloadable gift cards for their cannabis dispensaries.
From the perspective of the customers, the rewards of reloadable cannabis gift cards outweigh its limitations. But when challenges overshadow the benefits, this is where debit processing for cannabis dispensaries makes more sense.
Reloadable Gift Card Initiatives
Usually, most retailers experience slow sales at the start of each quarter and eventually recover from new holidays. For a more consistent sales cycle, cannabis dispensaries can offer reloadable gift card initiatives. The idea is to attain new customers who ordinarily would not opt for cannabis.
Cannabis dispensaries will see reloadable gift cards are crucial towards fill market needs, improve brand positioning, and increase annual profit margins. Reloadable gift card programs help cannabis dispensaries improve their retail operations and expand clientele. It is one of the best channels for cannabis businesses in North America to take advantage of if they are looking to boost their bottom line.
Pros and Cons of Reloadable Gift Card for Cannabis Dispensary Customers
One of the major rewards of a cannabis gift card program is that it creates more opportunities for dispensaries to generate upfront revenue. Besides, the idea of receiving payments upfront should be a top priority for dispensaries. From the retailers’ perspective, gift cards act as a win-win strategy.
However, retailers must assume that recipients of gift cards do not redeem their reloadable gift cards. But even if recipients decided to redeem their gift card, cannabis dispensaries can still bring in more revenue before all the merchandise is sold.
Pros: Full Payments
Another benefit of reloadable gift cards is that they are paid in full by the customers. The fact of the matter is that customers are three times more likely to buy a cannabis product using a gift card and make a full payment. Plus, when it comes to redeeming a gift card, shoppers do not want to deal with bargaining or wait until the cannabis products are on sale. Selling various cannabis products at full price works in favor of dispensaries and garners more growth.
Pros: More Free Marketing
With reloadable gift cards, cannabis dispensaries get the chance to reap the benefits of additional free marketing. In the digital age, there is no such thing as excessive marketing. Gift cards present a chance to cannabis dispensaries to promote their brand without paying any cost. It is an added benefit that allows cannabis dispensaries to cut back on marketing costs, improve market position, and gain a competitive edge.
Pros: More Convenience
Buying cannabis products using gift cards is more convenient than having to use cash. In some markets, dispensaries have cash-only payments as their sole option available. But cannabis dispensaries in the U.S have started to realize that this is a detrimental strategy and impacts their bottom line. Most customers do not carry around cash in large sums. Thus, the shopping experience through gift cards leads to an enjoyable, fulfilling, and effortless experience for customers.
Pros: More New Customers
Using gift cards, dispensaries can attain and retain more customers. In fact, through gift cards, dispensaries can turn shoppers into loyal customers. As cannabis retail booms, people want to purchase the best cannabis products without too much effort. When dispensaries make the process to purchase effortless through gift cards, more customers would want to buy the same cannabis products. On top of all, gift cards also allow shoppers to maintain their privacy.
Cons: Price Issue
The major pitfall of reloadable gift cards is that they are usually expensive for customers. On average, the cannabis reloadable gift cards can range from $2,000 to $3,000. But without an allowance, clients will have no choice but to pay out of their own pocket. It forces customers to opt for more affordable alternatives that do not come with reloadable gift cards.
Cons: Exclusive Approach
Reloadable gift cards offer broad coverage within a particular specialty. It means clients may not want to purchase a specific cannabis product just because it comes with a reloadable gift card. In short, customers do not want reloadable gift cards on a specific range of cannabis products.
Cons: No Ideal Reward System
Although many cannabis dispensaries offer a variety of top-tier gift cards, customers, may not be sure whether they might be useful. In some situations, an expensive cannabis gift card without a clear reward system does not make sense to clients.
Cons: Limited Service
The process and options to buy cannabis led to more complications than you may realize. Unless customers have access to an exclusive credit card service that cannabis dispensaries accept, there is a good chance they would run into issues.
Final Thoughts
Cannabis dispensaries can opt for more than one payment processing solution. Besides, a one-size-fits-all payment processing option does not exist. Customers want the flexibility to purchase their favorite cannabis product from their favorite cannabis dispensary. It is the main reason reloadable gift cards for customers make perfect sense.
Still, cannabis dispensaries should focus on the payment processor that caters to their needs and allows them to meet annual objectives. Most payment industry experts also want cannabis dispensaries to have robust relationships with banks to make growth-centric decisions in the near future.
Reach out to Paybotic today to learn more about our payment solutions.
