Getting a CBD merchant account isn't quite as hard as it used to be. Finding a reputable CBD payment processor is, however, still a task.
CBD payment options are broadening as more acquiring banks and processors are taking on CBD clients. And the ones that served the industry from the beginning are expanding on and improving their solutions.
Now is a great time to take a look at your current merchant account to assess if you have the most accurate solution and dial in expenses. With each year that goes by, the CBD industry is becoming more mainstream. And with it, CBD merchants are now able to operate more like a traditional business.
However, CBD is still a highly regulated product. For merchants in this industry, there’s no quick path for anything they do. Everything must be combed over, cross your t's and dot your i's. Everything from your website and terms and conditions to your product descriptions and marketing claims must be clean.
Making sure you're set up properly from the start will pay off in the long run. This is a task that is much easier when you partner with a Merchant Service Provider well versed in providing solutions for the industry.
When it comes to accepting CBD payments, reliability is top of mind for CBD merchants. The most reliable solution still comes back to the traditional, high-risk, CBD merchant account. With that in mind, there’re a few things to keep in mind while looking for a CBD payment processing solution.
5 Things CBD merchants need to keep in mind for CBD payment processing in 2021:
1. CBD still requires a medium to high-risk processor.
CBD payment processing is hot right now. And whenever there's a hot market, people come out of the woodwork to capitalize on it. That might be fine for some business types. It is not fine for a highly regulated industry like CBD products.
There are definitely still quite a few bad players with shady solutions that could get shut down at any time. Unfortunately, these companies aren't focused on helping you or your industry. Their only concern is making a buck.
They use deceptive sales tactics to lure merchants in promising low rates without clearly disclosing all fees and assessments. Then they lock merchants into long contracts that are difficult to get out of and carry huge early termination fees. And oftentimes they mis-code your merchant ID to get approval, which just puts you at risk of merchant account termination.
CBD merchants need to make sure to work with a dependable high-risk payment processor. One that’s a reputable company with experience in both high-risk solutions and serving the CBD industry.
2. "Low Fees" aren’t necessarily enough, even with a reputable payment processor.
Processing banks consider CBD merchants to be high risk. Because of this, the rates are going to be somewhat higher. So it makes sense that merchants need to find the best rate possible to protect their bottom line.
One thing to keep in mind, though, is that the “rate” isn't always the whole cost. This is one way some salesmen lead merchants to believe they are getting a “great rate”. They can offer you a nice low percentage for their mark-up but kill you with the per transaction fee. Or maybe the additional fees, annual fees, monthly fees, and assessments are ridiculously high, or even unnecessary. If the rate seems too good to be true, they are likely making up for it somewhere.
Merchants want to make sure to get a full disclosure of any and all fees outside of the "rate". This is the only way to know the true cost of your credit card processing rate, your “effective rate”.
3. Do they support retail sales?
Many CBD Processors will not accept retail sales. This is because they can't keep track of the products sitting on your shelf. With an eCommerce CBD store, banks can verify all the products you offer and make sure they fit the guidelines. They can also continue to monitor the inventory after the initial review. But they can’t send someone out to a retail location over and over again. For this reason, many Processors just don't want to deal with retail.
Retail CBD merchants need to make sure they are getting the solution that best fits their needs. But they also must make sure it is a transparent solution, and the bank knows what they are selling.
Ecommerce merchants should consider the future growth of their company. Is there a chance you'll branch out to retail locations? Do you want to be able to attend trade shows, a marketplace, or do remote sales? These would be categorized as retail locations. The last thing you need is to get comfortable with your current solution just to find out they can't provide what you need.
4. Keep an eye on your marketing to stay compliant.
The quickest way to get your merchant account shut down is to violate FTC and FDA guidelines for marketing CBD products. Your acquiring bank bases their own guidelines on the FDA and FTC guidelines. They are also regularly monitoring merchant sites for compliance. IF they find anything that could be construed as questionable, they can freeze or even close your merchant account.
Check out our “Best Practices For CBD Health Claims And Your CBD Merchant Account”. It goes into greater detail on how to market without garnering too much government attention. Or drawing the attention of your acquiring bank’s underwriting team.
5. Lastly, What to look for in a processor.
Keep in mind that getting a merchant account solution that is reliable for your CBD site requires some expertise. Everyone and their brother want to capitalize on this market right now. But it's important you get picky about who you work with.
The type of merchant account and payment gateway that is best for you will depend on many things. An experienced MSP will take into account the type of CBD products you're selling, the site builder you use, and your shopping cart. To name just a few.
An experienced provider will be able to anticipate issues before they are issues.
Working with an inexperienced provider is just going to make things harder on you.
For more on what to look for in a CBD payment processor, start with our article “5 questions to ask when applying for a CBD merchant account”.
When it comes to CBD payment processing, reputation is everything.
No matter how many different solutions present themselves, working with a reputable service provider is top priority. You can’t risk your business for anything less. The CBD industry is an ever-growing, ever changing industry. There are new and changing rules and regulations surrounding the products and sales.
Companies need a merchant service provider who understands this and will be there when they need them. And with such a highly regulated industry, that all the time.
Bankcard International Group is a highly experienced high-risk merchant service provider (MSP). Since 2006, our team has been working to provide banking and payments options to the Hemp and Cannabis industries.
We hold ourselves to the highest standards possible for the payments industry. Each one of our merchant advisors is a Certified Payments Professional under the Electronic Transaction Association (ETA).
We are highly educated in the industry, its regulations, and products. But we are also dedicated to providing payment solutions that are both stable and transparent. This is the only way for the industry to achieve sustainable growth and continued access to banking and financial solutions.
Customer service is a top priority for us at B.I.G. It's not how big you are, it's how BIG you are with your merchant service provider. YOU are our client, and we believe in treating you as such. It's through building long-term relationships that support our client’s success that fuels us.
We can help you find the best CBD payment processing solution for your CBD company. We can answer any questions you have. And we’ll be honest about it all.
Give us a call. We look forward to meeting your acquaintance.