The CBD industry has seen remarkable growth since the 2018 Farm Bill legalized hemp and its derivatives. Retail sales of CBD soared to $1.2 billion in 2019, with projections indicating a potential rise to around $10.3 billion by 2024. However, CBD merchants still face significant hurdles in securing stable and reliable credit card processing solutions.
The Slow Pace of CBD Payment Processing
While the CBD market expands rapidly, access to banking and financial services for CBD merchants progresses at a more cautious pace. The industry’s legal grey areas and the high rate of chargebacks add to the complexity, leading banks to categorize CBD merchants as high-risk clients.
Banks’ Reluctance to Serve CBD Merchants
Banks, traditionally risk-averse, are cautious about engaging with industries that could increase their liability or risk federal repercussions. For CBD businesses, this translates into challenges in acquiring merchant accounts through standard channels like Square, Stripe, or PayPal, which often exclude high-risk merchants like those in the CBD sector.
The Regulatory Maze of CBD
The 2018 Farm Bill may have legalized hemp-derived CBD with less than 0.3% THC, but it also placed it under the jurisdiction of the FDA. This move, combined with varying state regulations and the industry’s struggles with product consistency, has made it difficult for banks to confidently provide services to CBD merchants.
Challenges for CBD Merchants
CBD merchants not only have to navigate the complex legal landscape but also deal with the operational uncertainties of account closures and finding reliable payment processors. Mis-coding merchant accounts to bypass restrictions is a temporary solution that often leads to account termination.
Finding Reliable CBD Credit Card Processing
To establish a sustainable and growth-oriented business, CBD merchants need dependable payment processing solutions. This requires partnering with merchant account providers specializing in high-risk sectors, who understand the unique challenges and have established banking relationships to support CBD transactions.
Benefits of Tailored CBD Merchant Accounts
Working with the right merchant service provider brings several advantages:
- Domestic Solutions: Avoid the risks and costs associated with offshore accounts.
- Product Flexibility: Capabilities to process payments for a wide range of CBD products.
- Multiple Payment Options: Acceptance of all major credit cards and alternative payment methods like ACH and eChecks.
- Competitive Pricing: High-risk doesn’t have to mean exorbitant rates.
- Rolling Reserves: Customized solutions that potentially reduce or eliminate the need for reserves.
- Quick Integration: Easy integration with popular eCommerce platforms and compliance support.
- Exceptional Customer Service: Dedicated representatives and U.S.-based support for all merchant inquiries.
Bankcard International Group, with over two decades of experience in high-risk merchant services, offers comprehensive solutions tailored to the CBD industry. Our team of ETA-Certified Payments Professionals is equipped to navigate the regulatory landscape and deliver reliable payment processing solutions.
Experience the difference in service and reliability with our merchant account solutions, designed to support the growth and stability of your CBD business.
