Due to the federal illegality of cannabis, dispensaries face significant challenges in accepting credit card payments, with major networks like Visa, Mastercard, and AMEX unable to engage with marijuana businesses. This has led some dispensaries to risk accepting credit cards through non-compliant solutions, potentially leading to severe consequences.
Here are five potential damaging effects of using non-compliant credit card solutions in your cannabis dispensary:
1. Risk of Being Placed on the MATCH List
Accepting credit cards for cannabis transactions can lead to being placed on the MATCH list, a database of merchants marked as high-risk by acquiring banks. This blacklisting can severely hinder your ability to open new merchant accounts and is difficult to reverse, impacting both the business and its owners for up to five years.
2. Seizure of Funds
Non-compliant transactions may result in your payment processor or acquiring bank freezing your funds and shutting down your merchant account. As these funds are considered illicit under federal law, there’s a possibility that they may never be released, posing a significant financial risk to your business.
3. Revocation or Suspension of Cannabis License
Engaging in illegal activities, such as non-compliant payment transactions, can lead to the revocation or suspension of your cannabis license. States like California have strict regulations against fraudulent activities, with severe penalties including revocation of licenses and substantial fines.
4. Excessive Customer and Merchant Fees
Non-compliant credit card solutions often come with high processing fees, significantly higher than traditional business rates. These added costs can eat into your profits and potentially lead to additional charges for customers, negatively impacting your competitive edge and customer satisfaction.
5. Negative Impact on Public Opinion
The public scrutiny and media attention on the cannabis industry mean that any non-compliant activities can lead to negative publicity. This not only affects public perception but can also deter banks and processors from serving the industry, further limiting payment options for cannabis businesses.
In conclusion, while the options for cannabis payment processing may seem limited, it’s crucial to navigate this landscape carefully and avoid non-compliant solutions. By focusing on compliant alternatives like PIN Debit and ACH solutions, dispensaries can enhance customer experience, build loyalty, and prepare for future changes in the payment processing landscape.
If you’re looking for expert guidance in compliant cannabis payment processing, consider partnering with a reputable company that understands the unique needs of the industry. Learn more about compliant cannabis payment processing solutions by clicking below.
