In recent years, cannabidiol (CBD) has skyrocketed in popularity throughout the U.S. and the world. Derived from the hemp plant, this substance is being added to ointments, drinks, edibles, and even pet-care items and is believed to relieve pain, calm anxiety, and promote overall wellness. Given these benefits, the popularity of CBD is understandable. However, if you’re looking to cash in on the CBD craze, you need to understand why finding the right CBD merchant account is just as important as sourcing the best products to provide to your customers.
What separates CDB sellers from conventional businesses?
Why is it so important for sellers to connect with the right partner for payment processing for CBD businesses? After all, the passage of the 2018 Farm Bill removed hemp-based products containing less than 0.3% THC (the psychoactive product found in marijuana that produces a “high” feeling) from the list of Schedule I controlled substances. Despite this 2018 legal change, CBD businesses continue to be considered “high-risk” and, as such, are forced to pay higher fees and undergo more stringent scrutiny than their mainstream retail counterparts.
There are a few reasons for this categorization. For one thing, the Food and Drug Administration has not yet given CBD products their full approval. In addition, quality control on many of these items remains vague at best. As a result, payment processors — who are also in business to make a profit — are wary of the potential for health problems, legal issues, and high chargeback rates in the industry. Therefore, CBD remains high risk or hard to place.
What to look for in a CBD payment processor.
Until CBD is fully legal and receives stringent quality control, retailers will continue to be considered high-risk. However, many providers, seeing the demand, have stepped in to provide merchant services tailored especially for the industry. As you move toward launching your own CBD business, look for the following characteristics in your payments technology partner.
- Acceptance for various payment types. These should include credit and debit cards, prepaid cards, bank transfers (ACH), and gift cards.
- Payment solutions that integrate with your other business systems. Your payments processing should seamlessly tie in with all other aspects of your retail operation, including your billing, accounting, customer relationships, and employee management software.
- Enhanced security and fraud protection. This is especially important if you are accepting non-traditional payments or operating online. In addition, make sure your provider complies with the Payment Card Industry Data Security Standard (PCI DSS) to ensure that the security of the cardholder data you process is protected.
- Maximum scalability. Choose a provider that is nimble enough to grow with your business and adapt to changing payments and regulatory requirements. Expertise in these areas is especially helpful in the CBD sector, underscoring the importance of selecting a processing company with in-depth knowledge of the industry.
- Optimal affordability. Although you should expect to pay higher monthly statements and annual fees as well as the potential for rolling reserve and other restrictions, look for a provider who is transparent and reasonable when it comes to what they charge.
- Sensible contract terms.
- The latest point of sale solutions.
- Robust ecommerce and payment gateway solutions for secure online payments.
- An excellent reputation for customer care and technical support.
Although reviewing the many currently available CBD payment processing options can seem daunting, this research is a must if you want to be well-prepared for the launch of your CBD business.
At some point, sellers of CBD products may no longer need to jump through the extra hoops required for owners of high-risk businesses. However, this is not likely to happen in the near future. Therefore, your success as a seller of CBD merchandise relies upon your choosing the payment processing company that is most attuned to your needs, as well as to the specifics of this exciting, constantly growing industry!
