As more and more states have rolled back restrictions on the use of CBD as a medicinal product, the demand has taken off. The problem that has plagued the retail industry remains the difficulty and unreliability that businesses face when applying for CBD merchant account services. These problems have curbed much of the online payment processing for the CBD unless merchants opt to use a CBD eCheck processing service.
The surge in demand for CBD is attributed to the rollout of legislation legalizing the drug by numerous states across the USA. In response to these changes, the retail industry has exploded with many different types of smokable, oral, and topical variations of CBD. The demand is there as consumers have taken to the internet looking for these different products, but the major problem remains how to accept payment. Some credit card processors have attempted to create solutions for accepting credit or debit cards, but nothing has proved to be sustainable.
Why Accept eCheck Payments for CBD
The argument for accepting e checks for CBD remains that changes to the credit card industry are highly unlikely. This will all but put a stop to any long term payment processing solutions going through the Visa and MasterCard networks unless there are Federal changes to the CBD laws. This leaves only one really viable option to accept payments in the USA.
While other types of payment processing solutions are available, the most reliable and easiest to use for consumers and merchants alike remains electronic checks. With a quick and simple integration into most major shopping carts and an easy user interface for consumers to enter payment information, adoption to accepting e checks for CBD is fast and simple. Similar to credit or debit card payments, settlement times for funds takes about 2-3 days.
Another benefit of electronic checks is the fees. With a much lower fee schedule than credit or debit cards, accepting electronic checks will save merchants money. While most credit and debit card solutions, when available, run upwards of 5% or more, electronic checks are almost half that. Fees for CBD merchants can vary anywhere from 1-4% depending on the business.
Problems with CBD Payment Processing
The largest issue with CBD payments revolves around the legality of the Cannabis. Though most states now in the USA have some form of legalized CBD for medicinal purposes, it remains illegal on the Federal level. This has remained to be the deterrent with the payment card association, keeping them out of the industry for fear of legal liability on the Federal level.
Electronic checks operate in a different manner. Since many banks are organized on the state level, they adhere to the state regulations on CBD. This allows for electronic checks to be legally accepted in states where the sale of CBD is permitted. The federal oversight of chartered banks is still murky, leaving most payment processing for CBD and similar industries best done with smaller, state banks.
If new legislation, such as the SAFE banking act, were to pass in Washington, it could open the door for more options in the CBD industry. Until that is voted on, the best alternative remains electronic checks over the use of credit or debit cards.
How to Process CBD Payments with eCheck
Similar to accepting credit cards for CBD, electronic checks can be used for online CBD orders. Payment processing software offers many of the same features that credit card processors offer their merchants through their payment gateways.
Payment Gateway
Commonly thought of for use with credit or debit card transactions, an eCheck payment gateway allows customers the ability to enter in their routing and checking account numbers for making payment. The format is done as a blank check on the screen, making the process very easy for customers to fill in their information. The information is then sent off to the payment processor to create a check and process the transaction. All information is maintained by the payment processor, reducing the risk of the merchant when handling the customer’s account information.
Virtual Terminal
Integrated into the payment gateway, a virtual terminal is similar to a machine used in a retail environment. Merchants can be given the account information by the customer where the details can be entered into the virtual terminal. In the same fashion as a transaction initiated by the consumer, the transaction information is put into check format and sent off for processing.
Batch Upload
Once the information has been collected by the merchant, the files are then sent to the payment processor. This process of uploading the transaction information from the day is called the batch upload and it is a once-daily occurrence. Once the batch is received by the payment processor, each transaction’s information is used to create a unique check.
In the next few days, the customer’s bank will work with the merchant’s bank to clear the transaction. Once the payment has been successfully received, the merchant will be notified that it has been collected. The risks of merchants suffering from chargebacks and other problems are significantly lower since the dispute process is much more difficult. This results in more customers reaching out to the merchant to work out a solution.
CBD eCheck Payment Gateway
A concern of many merchants considering eCheck is the ability to integrate into their shopping cart. Fortunately, the CBD payment processing solutions from Allied Payments offer fast and simple integration into the largest shopping carts, including WooCommerce, Shopify, Magento, and PrestaShop. This allows for eChecks to be a simple addition to any existing shopping cart, especially carts that already have a credit card processing service integrated into it.
Payment gateway transactions for electronic checks are safe and secure for customers and merchants alike. With encrypted SSL servers handling the gateway security, merchants do not have to be concerned about sending payments across multiple networks. This highest level of security, PCI Compliance, is what helps ensure that fraud and other hacking are not possible with transactions sent through the e Check gateway.
The fast integration is done using an API provided by Allied Payments. Merchants can easily find the various WordPress plugins to help link their website shopping carts to the payment gateway. Having an integrated website to the payment processor is key to help simplify and streamline their business. Allowing merchants to spend more time growing their business instead of handling each customer transaction coming in. When customers do require the merchant to be involved or help with the transaction, the integrated virtual terminal will provide the same security and functionality as the payment gateway, but through a more hands-on approach.
Start Accepting CBD Payments
While the credit card industry has provided few solutions to help dispensaries and CBD retails in the United States, there are options. The most reliable and consistent solution for CBD merchant processing remains accepting eChecks. With some of the lowest rates for accepting payments online, it has proven to be the best solution for businesses operating in the hemp and CBD industries.
For more information, including pricing and technical questions, merchants are encouraged to contact our CBD eCheck team. They will be happy to answer any questions or concerns that merchants might have about setting up or starting our eCheck payment processing services.
Frequently Asked Questions (FAQ)
What is CBD eCheck processing?
CBD eCheck processing is a secure, digital payment solution that allows CBD merchants to accept electronic checks (eChecks) from customers. Unlike traditional credit card processing, eChecks transfer funds directly from a customer’s bank account to the merchant’s account, making it an ideal option for high-risk businesses like CBD.
Why is CBD considered a high-risk industry for payment processing?
The CBD industry is classified as high-risk due to ongoing regulatory changes, varying state laws, and its association with cannabis. Many traditional banks and payment processors avoid working with CBD businesses, making it harder for merchants to find reliable payment solutions.
Can I use eCheck processing if my CBD business was denied by other processors?
Yes, eCheck processing is often available to CBD merchants who have been declined by other processors. At Allied Payments, we specialize in high-risk industries and work with a network of banks willing to support CBD transactions legally and securely.
How do eChecks work for CBD payments?
When a customer chooses to pay via eCheck, they provide their bank account number and routing number during checkout. This information is used to initiate an ACH (Automated Clearing House) transaction that transfers funds directly from their account to the merchant’s business account, typically within 2-3 business days.
Are eChecks legal for CBD transactions?
Yes, eChecks are legal and compliant for CBD transactions when processed through a trusted and approved high-risk payment provider. Allied Payments ensures all CBD transactions meet current banking regulations and compliance standards.
What are the benefits of using eCheck processing for CBD businesses?
- Higher approval rates for CBD merchants
- Lower processing fees than credit cards
- Reduced chargeback risks
- Reliable payment alternative for customers
- Support for recurring billing and subscriptions
How quickly can I start accepting eChecks on my CBD website?
Once your application is approved and your merchant account is set up, you can typically begin accepting eCheck payments within 24–72 hours. Our onboarding process is fast, seamless, and fully supported by our expert team.
Is there a credit check involved in setting up CBD eCheck processing?
While some level of business background check may be required, most eCheck solutions do not require a personal credit check. Our goal is to provide fast, flexible solutions even for startups or businesses with limited processing history.
Can I accept recurring eCheck payments for CBD subscriptions?
Yes! eCheck processing is perfect for CBD businesses offering subscription-based products. You can schedule automatic billing for customers, ensuring timely payments and consistent revenue.
What types of CBD businesses qualify for eCheck processing?
We support a wide range of CBD businesses, including those selling:
- Full-spectrum or broad-spectrum CBD oil
- CBD gummies and edibles
- CBD topicals and creams
- Pet CBD products
- Hemp-derived CBD supplements
As long as your business complies with local laws and your products contain less than 0.3% THC, you may qualify.
How do I apply for a CBD eCheck merchant account?
Applying is easy. Visit our CBD eCheck Processing page and fill out the contact form. Our team will reach out promptly to guide you through the application and approval process.
Thank you Charles
