Hemp is federally legal in the U.S. This is possible because hemp contains less than 0.3% of THC, the substance in marijuana that causes a high. Even though hemp, and by extension CBD oil, has been legalized, CBD oil merchant processing is still considered high-risk. Merchants have a difficult time getting approved to accept CBD oil merchant payments like credit cards, e-checks, and ACH. This guide will discuss CBD oil payment processing, what a high-risk merchant account is and how to get approved for CBD oil merchant processing, quickly and efficiently.
What Is a High-Risk CBD Oil Merchant Processing Account?
A high-risk CBD oil merchant processing account is a type of merchant account that processes transactions for businesses with higher rates of chargebacks and returns. Additionally, all questionable business types will be categorized as high-risk, until they have a proven track record with the payment processor.
Only those businesses deemed high-risk have to get a high-risk merchant account. High-risk CBD oil merchant payments are necessary when a business owner is dealing with above-average chargeback and return rates. This is not so much due to the quality of their products but because of the nature of the business and the niche, they operate in.
Cannabidiol merchants can accidentally get approved for low-risk or regular merchant accounts, but they will eventually get shut down or terminated. These types of high-risk merchant accounts have different underwriting policies guiding them. Once underwriting determines whether the merchant is selling CBD-related items, or if the business goes above the accepted chargeback rate, the processor will suddenly shut down the account.
Why Do I Have To Get a High-Risk CBD Oil Payment Processing Account?
There are many reasons to get a high-risk merchant account for CBD oil payment processing. The main reason is simple: to get approved for your particular business type with the appropriate cannabis-friendly payment processor and acquiring bank.
CBD Oil Is Considered High-Risk
CBD oil is a high-risk business because many people still associate it with marijuana. This is understandable since CBD is present in marijuana plants. However, CBD oil (also called cannabidiol) is very different from THC.
Marijuana and hemp are both cannabis plants. However, both differ in how much THC and CBD they contain. THC is a psychoactive compound that causes the high associated with marijuana.
Both CBD and THC are present in hemp and marijuana plants, but hemp contains less than 0.3% THC.
Several people use CBD oil to treat anxiety because of how cannabidiol reacts with the human body. It reacts to parts of the brain that relate to feelings of wellbeing.
Even though CBD oil has been proven not to be harmful to people, many banks are still unwilling to work with CBD merchants because some merchants lie about the CBD oil content of their products.
High Chargebacks and Returns
High-risk industries deal with a higher number of chargebacks and returns.
A chargeback occurs when a customer makes a dispute with the business owner’s bank claiming to have been wrongfully charged or conned. If the bank decides that the customer is correct, it will reverse the transaction.
The difference between chargebacks and returns is that customers complain to the merchant’s bank instead of the merchant himself. Sometimes, the merchant is not even notified of a chargeback.
The usually tolerated chargeback rate is from 0.5 to 1%. For high-risk businesses, that rate can be as high as 3%. Opening a high-risk CBD merchant account means that credit card processors are familiar with your business type and are more willing to tolerate a higher chargeback rate.
High-Risk CBD Oil Merchant Accounts Pay Higher Transaction Fees
If you sign up for a high-risk merchant account to use for your CBD sales-related business, you will pay higher fees. Additionally, anytime a chargeback occurs, you need to pay attention as too many of these can create challenges.
If you run a high-risk CBD oil merchant processing account, the account provider already expects you to have a higher chargeback rate. However, this does not mean they will not take action by charging you higher fees and possibly holding your funds if you do not manage these properly.
How Do I Find the Best CBD Payment Processor for My Business?
There are dozens of payment processors and high-risk merchant account providers out there. When choosing a payment processor, consider the costs, transaction fees, track record, customer reviews and risk tolerance.
Cost and Transaction Fees
Before selecting a payment processor to work with, check what it’s going to cost you.
As a high-risk CBD business, you’ll likely be paying more than low-risk businesses regarding card transactions. Most low-risk merchants pay a 1.5% transaction fee per card payment. High-risk merchants can easily pay double, or even more depending on the circumstances.
It is best to team up with a payment processor that will charge you fairly.
Always make sure you always understand what you will be paying in fees. Will you be required to pay a monthly fee? Will you have to sign a long-term contract? It is better to compare policies before settling on who to work with.
Consider a merchant account provider’s track record before choosing to work with them. Make sure they have previously served high-risk merchants. Ensure that they are familiar with the CBD industry and look for customer reviews when possible.
Payment Processing Platform
Confirm that your CBD oil payment processing solution is secure and can handle various payment methods. Always ask if they have specific CBD credit card processing solutions like ACH and e-Checks.
An essential feature of a worthwhile payment processor is integrating with your website. This means that the provider will process all payments from inside your website. Redirecting customers to another page is never a good look for a business, especially a high-risk one.
Also, ensure that the processor you want to work with is secure. They should have a high level of PCI compliance.
If you accidentally signed up with an account provider that is not willing to tolerate a higher rate of chargebacks, you may be in for a surprise. Some providers will lock you into a long-term contract where you’ll be charged an expensive fee for early termination. Be careful,
Ask the sales team what their tolerance for chargebacks and refunds is like. Confirm the exact ranges. Some payment processing solutions will not accept return rates above 3%.
Chargebacks and refunds are expensive for receiving banks and merchant account providers because they get charged extra fees, and their brand is on the line. Even though they pass those additional fees down to the merchant, they don’t want to damage their business name.
Ensure you’re partnering with a high-risk merchant account provider with a functional customer service system. A reliable payment processor uses many channels to receive customer requests. Examples are email support, live chat, and phone support.
You need to partner with an account provider that is readily available to answer your needs and perform any troubleshooting.
The Extent of Merchant Services Available
Partner with a CBD oil merchant processing account provider that offers a wide range of services. It is better if they provide both dedicated and aggregated merchant accounts, if at all possible. Ask if they serve many high-risk merchant clients?
Ensure they process all forms of payments. It is also best they provide you with a POS (Point of Sale) machine if you run a physical store.
SecureGlobalPay – An Overview on CBD Oil Payment Processing
SecureGlobalpay has provided businesses with active merchant accounts for over two decades. They have worked with all forms of high-risk industries, including CBD oil merchant payments, travel, supplements, and nutraceuticals.
SecureGlobalPay provides the following services to high-risk businesses:
- Provision of dedicated and aggregated merchant accounts
- Provision of a secure payment processor that easily integrates with eCommerce sites
- High tolerance for chargebacks, returns, and refunds
- Fair transaction fees and contract periods
- 24/7 customer support
Contact SecureGlobalPay to get started.