Since hemp was removed from the FDA list of controlled substances in 2018, financial institutions have been more receptive of these businesses. While most states in the USA have approved some form of cannabidiol or medicinal marijuana, the Federal government still has not given CBD its seal of approval. This lands the CBD and Hemp industries on to a prohibited industries list at most credit card payment processors today.
Businesses partnering with Allied Payments will learn that CBD payment processing services are designed for and set up with the CBD industry in mind. Most payment processors in the high risk industry offer generic merchant accounts and payment solutions that carry high costs with excessive red tape. A CBD-specific account provides businesses with stability in their merchant processing solutions, more competitive rates, and better payout schedules. Helping businesses with CBD-friendly merchant accounts remains one of Allied Payments’ goals.
What is CBD?
A byproduct of cannabis, Cannabidiol has become a hot topic issue due to
its medical benefits and legal status. Though illegal on a Federal level in the USA, many states have legalized or partially legalized the sale and use of CBD. This has created an environment where restrictions and guidelines vary from state to state and by county.
Because CBD does not have to contain Tetrahydrocannabinol, also known as THC, the hallucinogenic ingredient of cannabis. This hallucinogenic ingredient of cannabis, and when it is produced with THC levels below 0.3%, it is classified as Hemp. This allows for the sale of CBD in most states without the risk of violations.
Users can take CBD by either smoking, vaporizing or using as an aerosol spray. While it is illegal for most medical purposes to make any claims about its benefits, CBD has been used in some FDA-approved drugs. An increasing number of products, from coffees and teas to candies and snacks, are being sold in various states infused with CBD.
CBD Merchant Accounts
CBD has traditionally been sold through a retail storefront, primarily smoke shops or vape shops. Many times these businesses could not accept credit cards for the Cannabidiol or Hemp Oil, thus requiring cash-only sales. With the loosening of restrictions, payment processors allowed credit and debit card sales but only swiped transactions. Today, most merchants with CBD stores can use their credit card machines for various transactions, including card-not-present.
Online sales began surging as soon as payment processors began approving card-not-present transactions. Merchant accounts and payment gateways that allow CBD and Hemp Oil to be sold through their networks experienced significant spikes in volume. Payment processors work to verify that the gateways are fully compliant with PCI standards. Helping CBD merchants eliminate the risk of fraud or theft through their credit payment networks.
Businesses accepting phone or mail orders can use a credit card or virtual terminal. Virtual terminals are usually an added feature of a high-risk payment gateway program. A virtual terminal is ideal for an e-commerce CBD business since it handles all online and phone orders in one location. By condensing sales into one portal, transaction management for CBD merchant accounts becomes quick.
Another popular choice of merchants is using CBD echeck processing services for online and retail sales. While credit cards are the most commonly used payment method, but some customers will pay with echeck. Businesses also offer this service in addition to CBD merchant accounts to help lower their fees for accepting cards and other non-cash payments online or in a merchant storefront.
Banking and Merchant Accounts for CBD
Until the federal government lifts the restrictions on CBD, it will remain legal on a state-by-state basis. Most credit card payment processors work across state lines, putting CBD into a gray area with varying laws and regulations.
While the sentiment of many citizens has become increasingly favorable, it will take pressure on politicians to make the necessary changes to federal laws. Until that happens, CBD businesses will have to seek out the services of specialized payment service solutions.
CBD Merchant Account Types Accepted
There are many different types of CBD businesses, all with guidelines to meet for CBD merchant account approval. Merchants must comply with all local, state, and federal laws for selling and distributing CBD products. Federal law dictates that Cannabidiol and Hemp-derived CBD must contain less than .3% THC weight not to be classified as a drug by the Federal Government. CBD merchants must also ensure consumers are over 18, requiring age verification software for online orders.
Our financial networks have a strong knowledge of the CBD industry and many of the products offered. Some of the Cannabidiol product types we can provide CBD payment processing services for include:
- CBD Beauty Products
- CBD Creams
- CBD Edibles
- CBD Gummies
- CBD Sprays
- CBD Supplements
- CBD Terpenes
- CBD Tinctures
- CBD Vape Oils
- CBD Vitamins
- Hemp Oil
If your CBD or Hemp product is not listed, contact one of our CBD payment professionals for more information.
CBD Payment Processing Services Available
Businesses today in the CBD industry have more options than before. As payment processors become increasingly comfortable with the products, more features are available. What was strictly a cash-only business has opened up to online sales and distribution. CBD merchants can accept payments in most locations by using:
- Credit Card Terminal
- Payment Gateway
- Virtual Terminal
- Check and ACH Solutions
CBD shops, whether online or brick-and-mortar, have many different options for processing payments.
CBD Credit Card Processing Issues Effecting CBD Businesses
Many merchants launching an online CBD business have used Stripe or PayPal to accept payments online. While these payment aggregators accept many types of businesses, they will not accept CBD businesses. Merchant accounts are not closed immediately after opening; their underwriters take a few weeks to months to check on a business. Once an audit has been completed, a merchant will usually be shut down immediately without notice, leaving the CBD business dead in the water.
Considered by most payment processors as a high-risk industry, CBD businesses will want to partner with a CBD merchant services provider specializing in Cannabidiol. The concern from payment processors is not like other businesses where chargebacks or fraud create problems. Rather, credit card payment processors are concerned about the legal implications they might face for allowing a Schedule 1 drug to be sold through their network.
Businesses selling CBD will continue to experience problems with payment processors until the Federal Government recognizes CBD as a medical product. With most states having different CBD laws, it proves to be too difficult for some processors to manage. Businesses that properly partner with a specialized processor will know that their hemp payment processing does not risk the complications of other payment solutions. Merchants operating without a CBD payment processor will be declared non-compliant with the credit card payment networks and have their accounts terminated soon afterward.
CBD merchants found non-compliant with their processor face account closures, held funds, and possible fines. The best solution for CBD businesses that do not want problems is to work with a specialized payment processor. At Allied Payments, our team understands CBD and only processes payments through our authorized CBD network. We aim to help eliminate potential problems, even chargebacks, with our client’s CBD credit card processing services.
Merchant Account Requirements for CBD Merchants
Most CBD businesses must apply with the same documents that other high-risk industries are required to provide.
- Identification of Owners
- Voided Check from CBD Business Checking Account
- Previous Bank Checking Account statements
- Previous Merchant Processing statements (when applicable)
- Copy of EIN
Most CBD merchant account service providers will also require the following documents to verify the products sold.
- Detailed Inventory of CBD products
- Copy of Lab Results for each product sold
- State Licenses/Registrations (where applicable)
- Onsite Inspections (where applicable)
Not every bank will require the same documents, but a CBD business should plan on having to submit most if not all, these documents during underwriting.
CBD Payment Processor benefits with Allied Payments
The benefits for businesses partnering with Allied Payments extend beyond the quick approvals for CBD merchant accounts. We work with merchants to provide the resources and tools to build a successful CBD business. While most payment processors will not touch the CBD industry, we have set out to become a leading CBD processor. We can lower credit card processing costs by offering our partners the same features that general e-commerce businesses utilize. With various fraud scrubbing, chargeback prevention, and compliance monitoring, we lower our risk while helping businesses grow through our specialized CBD merchant accounts.
As a competitive and advanced payment processor, we offer our CBD merchants:
- 24-7 Customer Support
- Complete Online Reporting
- Online Transaction Management
- Ability to Capture Credit Card Information
- Fraud Protection
- Chargeback Prevention
- Full PCI-Compliance
Open a CBD Merchant Account Today!
Merchants in the CBD industry looking for reliable and affordable CBD merchant accounts are encouraged to apply at Allied Payments. We integrate with; WooCommerce, Shopify, BigCommerce, Ecwid, LimeLight, Magento, Opencart, and Prestashop, to name a few. Our team of professionals can help businesses quickly set up their CBD payment processing at rates below our competitors. Our team will happily answer any high risk merchant questions and address concerns about your company or our CBD services before you begin processing payments.