With dozens of different in-person and online payment options available for consumers, it’s critical to have a reliable and versatile merchant account that can meet the needs of your business and customers. From unique payment options like phone payments and PayPal to traditional debit and credit cards, your ability to efficiently process payments is absolutely necessary in order to succeed in the CBD industry.
As the modern consumer has become more and more accustomed to the newer, more convenient forms of transaction fulfillment, many people don’t carry cash, or order from merchants that don’t support their preferred payment method. Over the course of a week, month or quarter, these missed opportunities can add up to a significant shift in revenue.
This is especially the case for online CBD sales. With online CBD sales nearly legal in every state, local merchants can completely transform their businesses by introducing their products to a national consumer base, nearly 50xing their audience in an instant.
Having the right merchant processor can make all the difference. From reliable online payment fulfillment to compatibility with your online portal, a merchant account is what can empower, or stunt, the growth of your business. However, selecting the best merchant processor for CBD brands is not as simple as going with the most known, most affordable or most versatile providers.
As with other facets of business management, CBD retailers will quickly learn that merchant processing is not entirely supportive of CBD oil and other cannabis-based products. CBD’s (loose) affiliation with marijuana deems it a high-risk product and therefore, for reasons of stability, legitimacy or reputation management, certain banks, and sales processors will not associate with CBD brands. This has forced CBD retailers to think critically to find the right CBD merchant account and to fully understand the implications of their high-risk classification.
What the High-Risk Classification Means for CBD Merchant Processing
As a derivative of industrial hemp, which comes from marijuana (a schedule I substance), CBD products carry a certain level of baggage in terms of perceived stability and legitimacy among the business and finance communities. This creates an opportunity for certain financial institutions to demand more from CBD companies while providing less. This will be felt in the high merchant rates (9% in many cases) as well as a rolling reserve (5-15% of each transaction will be held for up to 180 days).
CBD’s high-risk classification creates a bottleneck of numerous, eager CBD entrepreneurs and the merchant processors willing to support CBD transactions. This can often lead to weeks and even months of halted business growth as you wait among a crowded list of companies to be approved and set up with their merchant accounts.
Key takeaways of what the high-risk classification can mean for CBD retailers include:
- Higher merchant fees – 9%
- Rolling reserve – 180 days of chargeback protection accumulated from 5-15% of each transaction
- Fewer merchant processor options – Can lead to delayed starting periods and prioritization for larger accounts
Getting Approved for a Merchant Account
It can be intimidating for any new business to head into a meeting with a bank or other financial organization and attempt to open up a merchant account. Having to show all the right numbers and say all the right things in order to prove that you have what it takes to successfully run your business for years and years is nerve-racking. Now add into the mix the fact that what you’re selling has only been legal to sell for a few years and is considered a high-risk product, and it can feel like climbing a mountain for prospective CBD retailers.
The key is to find the right network of financial experts that are willing to see through the stigma and into the raw and untapped (yet proven) world of CBD sales. The truth is, CBD is a legitimate product, from both medical and recreational standpoints. There are many financial institutions that are more than happy to approve CBD businesses based upon their business model and competitive draw.
Finding the Right Payment Processor
In addition to finding a financial institution willing to work with your CBD company to support credit card, mobile and other transactions, you need to consider the unique aspects of your brand and how it connects with its customers. Ask yourself these 7 critical questions to determine what you’re looking for in the perfect merchant account solution:
- Will it support the payment methods that MY customers prefer to use?
- Does this payment processor integrate with all POS systems, card readers and terminals?
- Is this merchant account compatible with the best eCommerce platforms?
- Am I being charged any excessive or unnecessary fees?
- Will, there be a rolling reserve and if so how much?
- What are the merchant fees?
- Will I be locked into a lengthy contract?
The CBD industry is set to boom, so more and more merchant solutions arise daily to get a piece of the action. Don’t settle for good enough. Look for merchant accounts that will support your brand in ways that can lead to significant growth and sustained success.
Creative Solutions to Avoid Excessive Fees
For CBD brands looking to go the extra mile (or thousands of miles) to find the exact right CBD merchant transaction provider, may consider an offshore or hybrid (on/offshore) account. With it being clear that the U.S. is unclear on its stance on cannabis, the country’s financial institutions are uneasy, to say the least, when it comes to willingly backing CBD sales.
However, other countries don’t place such a stringent (high-risk) label on CBD products. This, in addition to more ideal tax and merchant fees, leads CBD companies to pursue offshore accounts. While offshore accounts themselves also carry a stigma, communication between countries has become more transparent over the years, thus leading to less “legally creative” uses for such accounts.
That being said, there are certain regulations and steps to be taken in order to secure an offshore or hybrid account for your CBD company, so you will want to consider all of your options before jumping ship with your finances.
Secure and Vetted Merchants for CBD Payment Processing
Customers give you money and that money keeps your business afloat. Thus, if you don’t have a surefire way to secure payments from your customers, you simply don’t have a business.
Cut through all of the confusion and make finding the right CBD transactions fulfillment solution simple by working with RevOffers. We have a vetted pool of merchants for CBD payment processing that are eager to find more CBD brands to back and help grow, through versatile and reliable merchant sales solutions. Fill out the form below to get more information!
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