The CBD industry has become massive in a very short period of time. And with the further changes to the legal status of cannabis-derived products, the industry is only going to continue growing and developing. Expected to reach $20 billion by 2024 in the USA alone, it’s no surprise that health and beauty retailers are vying for their share in the market. Naturally, this means the sale of CBD products will move largely into the online retail space. This is causing some trouble while trying to find a CBD payment processor.
Unfortunately, it may not be as easy to get started with your CBD retail business as you’d hope. Because of the precariousness of it’s legal and health status, you might run into a couple issues that you didn’t anticipate. CBD retail falls into a category of online products and services that can qualify a business as being “high risk”. We’ve covered what high risk is, and why you might be flagged that way.
One of the most frustrating issues that you might run into while getting your eCommerce ducks in a row, is finding a payment processor or merchant account who will have you. In being labeled “high risk”, you’ll find it very difficult to work out a payment solution.
Can’t I Just Use PayPal to Process CBD Sales?
That’s a big N-O from PayPal – at least in most instances. PayPal is one of the world’s biggest processors and is used by small businesses globally. They are very well trusted, and are typically easy to incorporate onto your site. But there’s a reason PayPal is so trusted: they only deal with very low risk businesses. If you have a high risk business, you can apply for review and approval, however it’s not guaranteed. Approval can also be revoked at any time, and it can come with some pretty strict limitations (transaction volume, for example).
PayPal has strict policies when it comes to chargebacks, fraud, and suspicious activity, which is excellent! However, the business owner is typically the one held responsible in those cases; not so excellent. In the case of chargebacks (shoppers disputing transactions), if you are on the receiving end to “too many” (it’s unclear what that number is), your account may be “limited”. By having your account limited, you may be restricted from accepting payments or withdrawing funds.
Unable to find specific reference to CBD in PayPal’s Acceptable Use Policies, we called and spoke to a business account representative. She stated that PayPal considers CBD to be a tobacco product (despite having no relation to tobacco at all), and thus restricts it. Regardless of their reasoning, it’s clear that as a new business owner, you should not be putting your payment processing eggs in PayPal’s basket.
So Who Will Process CBD Payments?
Thankfully, there are processors who recognize that the massive industries found under the “high risk” umbrella are worth the risk. Square’s payment processing integrates directly with Miva and they are happy to help you with your CBD payment processing. In fact, because they acknowledge that there is such a shortage in the market for CBD payment processors, they address it directly on their site.
Authorize.net, while not directly accepting CBD merchant accounts, will offer their services as a gateway on your Miva site. That means you need to apply and be approved for a merchant account under one of the following processing platforms. You can then use Authorize.net as a bridge to connect them to your Miva store:
- First Data Omaha
- First Data Nashville
- Global East
- Chase Paymentech
If you’re using Shopify, you’ll be out of luck with their built-in processor (Shopify Payments), but there are third-parties that will integrate with your Shopify cart. Ikajo, PaySpace, and Soar Payments, for example, all happily take on high risk businesses for merchant services. You’ll find different rates, terms, and conditions with every company you look into, and you may not be able to find one that is an absolute perfect fit. However, if you make yourself a pros and cons list of the ones you look into, you should be able to find a solution that will work for you.
Moving Forward with a Payment Processor
Once you’ve explored a few payment processing companies, and you’ve found a couple that look like they will work for your needs, reach out to them. Be completely honest about your transaction history and products to avoid having your merchant account unexpectedly shut down. Here are some things to look for in the processor you choose:
- Reasonable fees. Just as it sounds, high risk businesses come with more risk, and the risk falls to the payment processor. So it’s understandable that their fees will be a little higher than for low risk businesses. But they shouldn’t be gouging you.
- Platform Integration. Before you get too far with the company, make sure that they can easily integrate with your site platform. You don’t want to be in the final stages of signing up with a processor only to find that you’d have to build a whole new site in order to use them.
- Negotiable Contracts. Not every service will require you even sign a contract. But if you find one that does, check the contract carefully. If you have to pay any hidden fees, or have caps on transactions, you may need to negotiate into terms that better suit you.