If you are a regular reader of our blogs you know we are always speaking about transparent credit card processing. We preach Interchange plus pricing ad nauseam. You may also know that we strive to bring only the best, most innovative processing solutions to our clients that also meet our commitment to industry best practices.
With the farm bill bringing legality to the hemp and CBD market you would think getting this legal, transparent, affordable credit card processing we are always talking about would be getting a whole lot easier-but it is actually just getting more difficult and convoluted.
Yes CBD is legal on the federal level. But that brings with it a whole slew of new regulatory complications. Now the USDA and FDA are tasked with the oversight and regulation of production and sales, and don’t forget the pharmaceutical companies making moves to get their paws on the medicinal uses of the plant’s compounds.
If CBD is legal, why is accepting payments for it so hard?
The FDA states that you cannot add CBD to a food or beverage product without FDA approval. To top it off, they won’t allow anyone to introduce the product into interstate commerce. This makes the production and sale of many CBD products a little bit difficult for both brick and mortar and eCommerce markets to know where they stand as well as gain access to a viable form of accepting payment for their CBD products.
It creates a particular challenge for eCommerce merchants because they might be selling (and most likely are, because, well, that’s the point) across state lines.
If you would like a deeper dive into what the Farm Bill did and didn’t do and the consequences of legal hemp derived CBD use in products head on over to our in depth article here.
There are still great payment options for those in the CBD industry!
That being said, there are still viable payment options for those in the industry doing their best to follow the rules. At least most of the rules anyway!
I won’t promise that it is easy to get a CBD merchant account or that the fees are the same as a traditional retail merchant, or any of the other false promises floating around out there. What I will promise is that we do everything we can to stay on the pulse of the industry, partner with the most innovative providers out there, and strive to provide our clients with the most sustainable solutions we can find in order to support our clients continued success as all the rules continue to change.
For one of the most reliable forms of accepting payments in any eCommerce business turn to the old faithful ACH processing which is a perfect compliment to your credit card processing solution. First of all, it does not go across the interchange pathways that credit cards use so it is not subject ot the same regulatory requirements. With a significantly low chance for getting closed down this is the most reliable way to accept payments and ensure that your business can continue operating and ringing in the sales. ACH costs significantly less than credit card processing and can even work for recurring billing, so this is also a great option for lowering processing fees and boosting your bottom line. It’s also a great way to offer your customers more options for making payments that work for them.
Next, there actually is credit card processing for merchants with an established payment history. Regardless of type of payment, the history could include all payment history merchants have including ACH and check processing. Retail locations may be able to show cash deposit history through the submission of bank statements in order to prove sales history. These businesses will need to make sure that their online presence is “clean”, meaning there cannot be advertising geared towards the sale of any other products derived from cannabis, such as CBD flower, including any claims as so health benefits or cures on the building or website.
And lastly there are, as always, still options for acquiring an offshore merchant account where the underwriting guidelines are more friendly to CBD sales.
In the interest of full disclosure, these options are not without their caveats.
There may be requirements for the holding of reserves, (especially for eCommerce). The costs are higher than most merchants believe they should have to pay. The fact is CBD is still considered a high risk and because of that the processing comes with the costs associated with boarding a risky situation for the banks. Which is why ACH is one of the most cost effective options still available and we would highly recommend any merchant who is already, or wants to accept credit cards to also keep an ACH processing account to run alongside their credit card processing. For brick and mortar merchants you may want to consider also opening a Cashless ATM account, where customers have the option to use their ATM card to essentially make a ‘withdrawal’ to purchase their products with. It gives your customers more options for making their purchase and keeps your sales flow going in the event the merchant account were to get shut down.
It is a frustrating time for business owners in the legal CBD industry and for for the payment processing providers who are trying to service them as well.
There are a lot of misconceptions about the legality of CBD in the marketplace and the different rules set forth by each state only complicate things further.
As always, we work hard to stay abreast of both the laws and regulations surrounding the industry and the best and most reliable payment solutions available today and make every effort to bring that information to our clients.
As steadfast advocates for fair and transparent payment processing for the cannabis industry as a whole, Bankcard Brokers is dedicated to providing you with the truth about credit card processing so that we can forge a thriving long-term business relationship.
Our ETA-Certified Payments Professionals are ready to give you honest, educated advice regarding the best solutions for your particular CBD business model because we believe you deserve to be treated with integrity.