Archives October 2020

If you’re looking for new ideas to sell your CBD products online, that means you already know about cannabidiol and their popularity in the wellness and health world. Many online companies are introducing CBD into their eCommerce shops. As per the Forbes report, the industry will reach $16 billion in revenue by 2025, and there is no doubt about it.

After the declaration of the 2018 Farm Bill, several eCommerce businesses are looking for payment gateways that enable CBD merchant processing. The demand of people for CBP products is increasing, and business owners are stocking up their offline and online stores with different CBD products to meet customers’ needs.

As this is a high-risk industry, you need to understand what is required to legally process CBD business payments.

What is CBD?

CBD was discovered around 80 years ago, and there are still so many things we need to know about this chemical compound. CBD is found naturally in both hemp and marijuana plants. But, a lot of CBD products available in the market are created from hemp plants. With the increasing demand for CBD products among people, it is quite evident that businesses could make a significant profit by selling this compound.

Is CBD Legal? 

The high risk of CBD and the fact that marijuana will remain illegal in the industry make accepting online payments a little restrictive for merchants. CBD products derived from marijuana are not legal at the federal level. Just like hemp, marijuana or cannabis is a part of the cannabis family. One primary difference between both plants is that marijuana produces over 0.3% THC, which is the plant’s psychoactive element.

The confusion between marijuana and hemp has caused a controversy among hemp product providers who are struggling to find processing solutions to accept online payments for selling CBD products.

Even if you own a business specializing in selling hemp-derived CBD products, you still need to invest in the right CBD payment processor designed to optimize high-risk payments.

What You Need to Look for in a CBD Payment Processing Gateway

As per 2018 reports, the sales rate of CBD products in the United States ranged from $600 million to $2 billion, and it is expected to cross $22 billion by 2022. That means a significant number of eCommerce business owners are looking to invest in a CBD payment processor. But, here are a few points you need to look into before opening a CBD seller account.

High-Risk Availability 

The first step you need to ensure is that the CBD payment processor you are choosing can deal with high-risk transfers. The reason is that the industry is highly prone to payment frauds and chargebacks, and there are minimal CBD payment processing service providers who are ready to take or handle risks linked to such transactions. To avoid hefty fines later, make sure your potential CBD payment processor is all set to deal with high-risk transactions.

Low Fees 

Another point is that – never go with a company that charges an immense amount for their services. There are payment processing providers who charge a registration fee, whereas some don’t. You also need to consider other charges, including statement fees, terminal fees, non-compliance fees, compliance fees, and chargebacks. Keep all these points in your mind, look for different options, and pick the one you find reasonable for you.

Client Support 

When it comes to handling online and offline CBD product transactions, you should be prepared for every worst scenario. While finalizing your payment gateway, ask your service provider how they manage payment disputes and prevent their clients from frauds. In this case, customer support is something you must look for. Ensure the CBD payment processing you are hiring is offering 24/7 customer support to help you deal with payment problems whenever they appear.

Reasonable Contract 

Every CBD payment processor will ask you to sign a contract, and the deals and fees of every business are different. It would be best if you take your time to pick one that suits your company the best. It is also suggested to stay away from companies that focus on establishing long-term partnerships only, especially when they don’t have testimonials to prove their claims.

Choose the Right CBD Payment Processor 

As we all know, competition is very tough in the CBD field. So, if you want to boost your business profit and customer retention rate, you need to be at the top of your game. The right CBD payment service processor can provide you with customized payment solutions that fit your business the best. They can make transactions smooth by eliminating the hassles linked to accounting, administrative tasks, and business upkeep, frauds, chargebacks, and more. Overall, choose your payment processor wisely by keeping your business goals in your mind.

In the cannabis industry, access to cannabis banking services seems impossible. For suppliers, vendors, retailers, or anyone else who deals with this business, bank options are relatively minimal. Do you know the reason behind this?

The reason behind this is The Controlled Substances Act. This bill was passed in 1970, which stated that marijuana or cannabis is a Schedule 1 drug. That means cannabis is placed alongside other drugs such as LSD, meth, and heroin. Consequently, the sale of marijuana or cannabis products is illegal under federal law. This creates a barrier for dispensaries or stores to make a legal marijuana or cannabis banking process.

Moreover, financial institutions and credit unions are hesitant to offer banking services. This is because of the position of cannabis-related businesses in a legal “gray area.”

Current Status of Cannabis Banking

The legal gray area was not always a problem. It was not until 2013 when the Departments of Justice released a memorandum called the Cole Memos. This memorandum declared that the federal government would not impose any ban on the sale of cannabis products. Instead, it trusted the states to implement their own regulatory systems for legal marijuana.

However, five years later, the US government canceled Cole Memos. This created doubts about how law enforcement would react to the cannabis industry.

However, just five years later, the government rescinded the Cole Memos. This left uncertainty around how law enforcement would respond to the marijuana industry. As a result, criminal prosecutions were applied to banks that collaborated with cannabis-related businesses, even stores with state-issued licenses.

For cannabis dispensaries or stores that get help from financial institutions or banks, compliance remains a huge problem. Even with a bank account, there are several regulatory and legal boundaries to pass through. For instance, both cannabis businesses and banks must ensure that all sales are permitted to avoid any issue later.

Costs Related to the Cannabis Industry

Being associated with the marijuana business is expensive for all parties involved. Cannabis businesses have to pay higher merchant account charges, and financial organizations must have to use their assets to put together all the data. The burden of additional expenses for merchants and banks is shifting to consumers, making cannabis purchases at stores complicated and more expensive.

Besides the associated costs, cannabis banking procedures are not efficient because banks or financial institutions still risk litigation. The marijuana industry doesn’t function differently from the rest of the economy. They communicate like any other offline business; pay utilities, lease space, and do business with transporters, vendors, and suppliers. The process is similar to any other company in the market.

Also, the increased liability makes banks anxious to collaborate with cannabis businesses, leaving them to cover their costs themselves. Consequently, most marijuana dispensaries are not getting the banks’ support and operating as a cash business, which is a dangerous and expensive choice.

The Frustration of Merchants and Banks

The lack of cannabis banking choices has brought frustrations among merchants as well as banks. For a cannabis business owner, this is undoubtedly expensive. They need to improve their security to protect business cash. Also, managing regular expenses, such as rent, tax, and payroll, is challenging with money alone. On the other hand, financial institutions and banks have to fulfill many responsibilities to ensure no federal law violation.

As a result, banks are avoiding offering cannabis baking services to cannabis-related businesses. Overall, until the legalization of marijuana or cannabis banking, communities, banks, financial institutions, and companies have to pay the price of inaction, which affects all aspects of the marijuana industry.

Legalization of Cannabis Banking

Though it seems impossible, if cannabis banking becomes legal, it would be ideal for both banks and cannabis-related businesses. It will regulate easier, safer, and better business practices. Banks would deliver their services to more and more cannabis merchants without prosecution or any fear. The legalization of cannabis banking services would also help in combating illegal payments.

Also, with the reduction of additional charges (no security expenses and all), it’s predictable that cannabis businesses will make more profits. Also, the approval of cannabis banking for the marijuana industry would lead to a lower crime rate in communities.

The Bottom Line

The question is not whether or not marijuana or cannabis banking services can be legal in the community. It’s the financial sector overcoming the marijuana industry’s stereotype that seems to be a huge barrier that is holding back marijuana banking from improving beyond cash-only business.

There’s no doubt that accepting credit card payments is a perfect way to boost your business sales, improve cash flow, and increase customer experience. No matter the size of your business, the ability to accept online payments is a must-have. Due to the advancement in technology, it’s never been this easy for companies to accept credit cards or other online payment options.

After the detailed analysis, one of the most eye-opening stats that came to light was – small companies that deliver flexible payment solutions to their customers improved their revenue rate by 30%. This is one solid reason to opt for credit card payments; otherwise, the list is quite comprehensive. Overall, you can say that accepting credit cards is a great way to increase your business revenue by approx 30%.

The Importance of Understanding How to Accept Credit Card Payments

With the advancement of payment platforms technology and decreasing cash use, you cannot understate the importance of understanding how to accept credit cards, debit cards, and gift cards for payments. It is necessary to ensure that your business accepts credit cards in order to survive in this industry.

We have noticed a common trend in companies, where businesses that switch from accepting cash-only payments to cash and credit card transactions noticed an improvement in their business revenue by 30%.

Cash payments are simple and great. That’s why it is essential to start accepting credit card payments. The acceptance of credit card payments is linked to the stability and growth of a company. Being open to multiple payment options for your business services and products will help you grow faster. Forget about the development of your company if you don’t accept any other payment method than cash.

Now the question is, if credit card payments are so essential, then why businesses are finding them so complicated. We understand this issue; therefore, we prepared this guide to show business owners what kind of payment options are available.

Choose the Right Credit Card Processor Based on Your Business Type

No matter whether you own a mobile, brick-and-mortar, or online credit card processing method, you will be able to understand what type of payment system will work for your company.

Mobile Systems

Mobile payment systems are ideal for companies that are in between an offline and online business. If you think you need to accept credit card payments while on the go, adding a mobile system to your payment processing solution can be a great pick. You have two options to pick from, such as:

• Mobile POS
• Mobile Payment Apps

Brick-and-Mortar Systems

Brick-and-Mortar payment systems are suitable for businesses that carry out most of their business operations in-store. These payments include:

• POS Systems
• Credit Card Terminal

Online Systems

Online payments are best for companies that handle most of their business through an online store or an eCommerce platform. Companies that process most of their transactions online definitely require an online credit card processor. If you want to become an online business, go for an online payment system as soon as you can. When it comes to picking a payment system for online businesses, select any of the following:

• Virtual Terminal
• Payment Gateway

What Makes a Good Credit Card Processor

Whether your business accepts in-store, on the go, or online credit card payments, make sure to pick a credit card payment processor that meets your needs the best. Are you looking for a credit card processor but don’t know where to begin? Here you will find what makes a sound credit card processor:

• A credit card processor must be able to accept cards from all credit card service providers. Cards from a card service provider, such as Mastercard, American Express, and Visa should be compatible with all processors you pick.
• They must put your requirements above anything else. You can guess this through the fees they take from you. Do they charge you a flat rate? Or are they charging you an extra fee? An ideal credit card processor will charge you as low as possible.

If you want your company to increase revenue by accepting credit cards, make sure to choose the right credit card processor that can help you the most. Compare the pros and cons of different systems and decide which one makes the most sense for your company.

Conclusion

So, is your business accepting all major credit card payment options? If not, this is the high time to update and modernize your payment options. Credit card payments are fast becoming the preferred payment option for small companies across the globe. Overall, increase your business revenue by accepting credit cards from customers to process payments.

Besides, make sure your credit card payment processor optimizes PCI (Payment Card Industry) compliance as well. This will ensure the safety and security of your customers’ data and keep your company away from PCI compliance charges.

Currently, marijuana is legal in several states, and it can be legal in your state as well. But wait, does that mean you can pay for marijuana with your credit card? There are two answers to this:

First: Maybe. Some dispensaries claim to accept credit cards.

Second: No. According to experts, the major card service providers do not allow businesses to use their cards for purchasing marijuana. They don’t even have any merchant code for these purposes. If a merchant uses a credit card for marijuana purchases, the credit card company will block that card immediately for violating the policy. They do so because marijuana or cannabis is still an illegal compound under the federal law.

Now, it is clear that major credit card networks do not allow marijuana credit card processing. So, without the option of credit cards, cash becomes the primary option of payment to buy marijuana from a cannabis dispensary. However, not allowing people to purchase marijuana through their cards can lower sales and revenue for marijuana dispensaries and stores. Let’s explore some of the ways merchants are currently running transactions.

Cash Payment

For maximum store or dispensary owners, cash is a burden rather than a help. When marijuana dispensaries only accept cash payments, it automatically decreases sales. Because credit card companies don’t allow marijuana purchases, if they accept marijuana card deposits, the federal government authorities could close down their services. As a result, all cannabis transactions are made in cash, such as buying from vendors, paying taxes, and more.

Payment via ATM

Many dispensaries use different types of on-location ATMs to conduct payments. Usually, the ATMs at a marijuana store can do the following two things, such as:

• Enable consumers to withdraw cash directly from their bank accounts.
• Allow people to exchange their cash in bank accounts for vouchers, which can be used as in-shop credit for the cannabis business – this is referred to as “cashless ATM.”

The whole process of using cashless ATMs is similar to regular ATMs; only instead of getting cash, you will get a receipt that says you may use the specific amount on that slip to make your marijuana purchases at a dispensary.

This type of dispensary transaction option is way more comfortable than cash payments but comes with several risks. If you check your payment status after making an ATM transaction for marijuana, you might find it listed at a flower store or health food shop. That means you are lying to your bank about the business, making it a high-risk payment option.

Also, Using ATMs for transactions is quite expensive for both businesses as well as customers. Business owners have to pay a monthly charge to use those ATMs and consumers have to pay a terminal fee. And for cashless ATM payments, the fee is even more.

Mobile Payments

Another option is to pay through apps using your mobile phone. There are several mobile apps that can be used to pay for marijuana purchases. These apps are generally linked to the users bank account. When you pay using these apps, the money deducts from your account automatically. Overall, mobile apps are an efficient method to process cannabis payments in marijuana stores.

Marijuana Industry – A Growing Field with Increasing Needs

As the demand for marijuana is increasing every day, flexible payment options have also become a necessity. States which allow operating recreational dispensaries or stores are shaping the marijuana or cannabis industry. They have prepared state by state guidelines to maintain legalization and benefits. The cannabis industry is quickly turning into a multi-billion dollar market.

To allow marijuana credit card processing, cannabis businesses have to rely on high-risk processors. This is the only way to authorize credit card payments at stores so far. These systems utilize encrypted technology for secure and private transactions. By optimizing transactions through this method, credit card transactions process in proper accordance with the federal level.

Merchant ePay can help your dispensary process credit cards with a fully FDIC insured platform. The system allows you to accept all major credit cards as well as features like adding tips and surcharging.