Payment Solutions for CBD Sellers
- Common challenges in finding payment processing solutions for CBD sellers.
- A list of merchant services for CBD sellers.
- How to choose the right credit card processing system for your CBD store.
Many first-time CBD sellers — whether they are just direct-selling on their own or starting a CBD business — are surprised to learn that not all banks, merchant services companies, and credit card processing companies are willing to do business with CBD sellers. After all, hemp and CBD were completely legalized at the end of 2018. So what gives?
The problem is that credit card processing services consider CBD to be in the category of high-risk purchases. This means that CBD purchases produce a higher rate of chargebacks than most common goods. One thing these credit card companies don’t want to do is approve a transaction only to have it challenged by the purchaser.
Some companies are willing to take that risk. However, their service comes at a premium. Oftentimes transaction fees and percentages of the sale are higher than for lower-risk clients. Moreover, some merchant services willing to do business with CBD shops will hold back the funds for a longer period of time than they do for the lower-risk clients. It’s not uncommon for the bank to hold onto your cash for three months in order to assure that the charge is legitimate and the customer is satisfied.
The merchants’ services providers that are willing to do business with CBD stores are generally younger companies that see that times are changing. That doesn’t mean they don’t consider CBD to be high risk or that their fees aren’t higher than average. However, there are other options that are more “with it” that aren’t so concerned about working with CBD sellers.
A perfect example is the proliferation of digital payment services such as Stipe, Square, PayPal, Cash App, and Venmo, to name a few. Not only are these big tech companies willing to process credit card transactions, but they can also be extremely helpful in getting their business users set up with tools such as online shopping cart plugins and card swipers among others.
Let’s take a look at both of these categories — traditional merchant services and digital payment services — and see what they have to offer. After that, we’ll touch briefly on the newest form of digital payments — cryptocurrency.
Keep in mind that the lines between these services are becoming more blurred as technological advancement marches on.
Merchant services for CBD sellers
In spite of the difficulties, more and more payment processing companies are tapping into the lucrative CBD business.
There are now several traditional credit card processing companies that are willing to handle CBD transactions. As we mentioned, transaction processing fees can be higher than average and some hold onto your cash for a longer period of time.
NOTE: These are not in any particular order. We are not recommending you do business with these companies. You need to do your own due diligence.
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e Merchant Broker
eMerchant Broker, or EMB, are specialists in high-risk merchant accounts such a CBD sellers. They also offer check processing, chargeback protection, reloadable debit cards, and ecommerce payment gateways, and ATMs as well as small business loans.
PayKings superpower is that it protects high risk merchants from things like chargebacks or having funds frozen. PayKings does not offer credit card services to marijuana dispensaries, only to CBD sellers.
Payventures provides high risk merchants with assistance in obtaining credit card processing services and digital payment gateways. The company also provides fraud identification and identity verification services as well as currency conversion.
Platinum Payments offers payment processing for cannabis merchants with no long-term contracts. The company also offers products such as POP terminals, mobile apps, gift cards, and loyalty programs.
Sky High Moly
In addition to traditional credit card processing services from Visa, MasterCard, Discover, and Amex, Sky High Moly also offers ACH Processing (bank transfers), point-of-sale systems, and cashless ATMs.
The Transaction Group
Choosing a merchant services company
There are countless other options out there in addition to those listed above and more and more are coming online every day. So how does a CBD seller choose the ideal company for their business? Here are few tips for doing some research and things to watch out for.
- Talk to other CBD sellers and see which systems they’ve had luck with — good or bad.
- Avoid companies that aren’t familiar with hemp products.
- Ask for references from other CBD sellers using their services.
- Avoid companies that spawn horror stories such as frequent service outages or suddenly cancelling accounts.
- Be sure that the system you choose integrates easily into your POS systems.
- Always triple check with your rep to make absolutely sure there are no hidden fees, especially if you’re signing a long-term contract.
- If you’re planning on expanding into multiple locations make sure that you choose a system that will grow with your company.
The best way to find the right merchant services for your CBD business is to talk to other successful CBD sellers and see which credit card payment solutions they recommend. Some have frightening horror stories. Take those with a grain of salt. They might not apply to you. And some will sing the praises of their service provider — but it might not be a good fit for your business. Nonetheless, talking to other CBD shop owners can provide you with a wealth of knowledge that you won’t get by talking to salespeople at merchant services companies.
Digital payment services for CBD sellers
Working with credit card processing companies can be tedious. For larger companies it makes sense because they can hire an expert to manage these kinds of needs. However, if you’re just getting started as an entrepreneur there are some much less complicated options such as using Square, Stripe, PayPal, Google Checkout, etc.
Services such as Shopify and PayPal aren’t just for the little guys. Some big operations use these platforms. Companies such as Hasbro, Crabtree & Evelyn, Penguin Books, and Red Bull run their credit card transactions through Shopify and eBay runs entirely on PayPal.
The benefit of these kinds of services — which are essentially online banks that process credit card payments on your behalf — is that they don’t involve things like commissioned salesmen, credit checks, long term contracts, delayed settlements, and so forth. The downside is that you might pay a higher fee, or the process might not be as simple for the staff and/or the customer who might have to whip out a mobile app to make the transaction.
These digital payment services can oftentimes be integrated into a website shopping cart system. And if your website is built on a service such as Shopify you may have access to their payment gateway. In addition to transaction processing fees, Shopify charges a monthly fee for hosting your site (which is reasonable considering all of the tools they offer for building an ecommerce website).
Below is a list of some of the many digital payment solutions for CBD sellers.
Cryptocurrency payments for CBD
The world of cryptocurrency is a deep rabbit hole. There’s a lot to learn before you get up and running accepting Bitcoin. But over time it will get easier to do business in cryptocurrency. For now, it’s so new that the vast majority of buyers don’t use it. So there’s no need to rush into figuring it all out. But it’s worth looking into at this early stage.
One of the great things about cryptocurrencies is that they are not banks. Most are decentralized networks just like the Worldwide Web. So they don’t have to worry about chargebacks.
There are several companies coming online that offer integrated cryptocurrency payment solutions. Moreover, digital payment services are starting to offer cryptocurrency payments to their clients. In these cases, such as with PayPal, the clients need to purchase crypto through their app. But when they pay your company for a product you are paid in U.S. Dollars, which makes things simple. However, not all crypto holders want to do business with PayPal.
Do your own due diligence and choose wisely
The best tip we can give you is to take your time researching payment solutions for your CBD company. The choice of merchant services, credit card processing solutions, and/pr digital payment platforms can make or break your business.
If you rush into it and choose the wrong provider and you could be in for recurring headaches. Choose wisely and you’ll enjoy some smooth sailing.