How to Get a CBD Merchant Account with a Cannabis Friendly Processor
Manufacturing or distributing CBD products is a new and exciting opportunity with huge earning potential. Early adopters can carve out a lucrative business or expand their existing lines. How do I get a merchant account for my CBD business? Learn how to get an online CBD merchant account approved without wasting time applying with multiple processors, and start accepting payments with a Cannabis friendly payment processor today.
Consumer demand is well established. Supply has been legalized in most states and there is nothing stopping CBD and Cannabis entrepreneurs from opening online storefronts and retail dispensaries using a cashless ATM processor to facilitate sales of their Cannabis-related products. However, there is a “But”! Getting a CBD oil merchant payments account with a reputable payment processor is not easy.
Growing any business demands that you can accept card payments. Without a proper CBD merchant account your business is greatly constrained. The good news is, SecureGlobalPay has solutions in place with Cannabis friendly acquiring banks and high-risk payment processors that are comfortable with the industry. We can assist your business in accepting payments without the risk of getting shut down due to business type
What is CBD Merchant Account and Why is it Difficult to Get Approved?
A CBD merchant account allows for the uninterrupted acceptance of non-cash payments for the sales of CBD OIL and Cannabis related products. Cannabidiol (CBD oil) is a compound taken from hemp plants (cannabis sativa) also known as industrial hemp. These are NOT the cannabis plants grown for marijuana and hashish.
CBD contains a natural analgesic (painkiller) and anti-inflammatory properties. It brings relief to many people who suffer from chronic pain, seizures, anxiety and other neurological conditions.
Tetrahydrocannabinol (THC) is the psychoactive element in cannabis that gave rise to drug abuse. Hemp has only miniscule, harmless levels of THC.
Unfortunately, the very mention of cannabis has created concern in the past.
The problems surrounding CBD have always been rooted in confusing laws and misinformation about CBD in general. Individual state laws sometimes conflict with the federal government’s interpretations within the payment processing space. It can be a legal minefield on many levels.
What Does the Law Say About Having an Online CBD Merchant Account?
Right now, medical marijuana is legal in about 30 states and recreational marijuana is permitted in about 10 states. Having an online CBD merchant account for the sale of CBD oil online payments is legal in all of these states but not in others.
The Agricultural Act of 2014 permitted states to pass laws allowing industrial hemp to be grown under certain conditions. It didn’t specify who could sell hemp derivatives and products.
Between 2013 and 2018, federal law (the Cole Memo) allowed state-authorized marijuana businesses to thrive. When that was rescinded, states still supported their own pro-marijuana laws.
However, this conflicts with the fact that marijuana has been classified as a Schedule One drug since 2016 just like heroin, cocaine and methamphetamines. Any cannabis plant products, including some forms of CBD, are still illegal in certain states.
Why do most Payment Service Providers Make it Difficult to Get a CBD Merchant Account?
Most low-risk payment service providers make it difficult to get a CBD merchant account as the majority of acquiring banks hate the risk. The fact that CBD oil comes from hemp, and coupled with the confusing legal situation surrounding all cannabis-related products, makes it a high risk industry.
Producers and suppliers can be shut down and terminated if they are found in breach of the law at some future point. That would leave acquiring banks and card payment processors facing large levels of refunds and all the associated costs of chargebacks and so on.
The fact that the possession, use, and sale of marijuana are still illegal under federal law makes it extremely difficult to get a CBD merchant account and enough justification for some acquiring banks to not offer CBD oil payment processing solutions at all.
How to Get a Merchant Account for my CBD Business?
To get a CBD merchant account for your business, you first need to understand the factors that are common to all high-risk merchant accounts.
Each bank’s underwriters set their guidelines on which particular merchants may be considered approved as high risk. It means different banks have different views on risk. The potential for fraud and chargebacks are always the two biggest concerns when assessing an industry for merchant accounts. However, reputational risk is also a concern when dealing with lower-risk acquiring banks, and the main reason not to apply with these institutions in general, for the sale of cannabis-related products.
These are 7 factors banks take into account when assessing the risk level of a business:
- The industry the business operates in – is it legal?
- Where it is located
- Where its customers are located
- Its size, card payments record and credit history
- Number of transactions and average dollar value
- Level of chargeback ratio and likelihood of fraud
- Whether it operates online and to what extent
A CBD merchant account is special because the acquiring bank and processor are familiar with the business type, have assessed all the known risks of handling electronic payments, and are able to try and mitigate the potential losses associated with this vertical.
How to Get a Merchant Account for CBD with SecureGlobalPay?
SecureGlobalPay has relationships in place with Cannabis and CBD-friendly payment processors willing to approve a merchant account for CBD. With our years of experience, we have identified those particular acquiring banks that will not shut down your account down due to a business type alone. If you are looking for true and trusted payment solutions for your high-risk business type, including those offering CBD products for sale, look no further.
Click here now and we will set you on your way to a CBD merchant account.
