7 Critical Things To Look For in Your CBD Payment Processor
If you sell CBD, chances are you're no stranger to obstacles, high rates and unwelcome surprises when simply trying to accept payments. Although the success of your business hinges on your ability to accept credit cards, most payment processors shy away from CBD because of its association with cannabis (even though there is a distinct difference between the two).
This puts business owners in the unfortunate position of struggling to keep up with compliance standards and paying exorbitant fees while continually searching for the right technologies that will help them do something that is at the core of any business: accepting payments.
While these are real issues for most businesses that sell CBD, there are ways that you can avoid them. The key lies in finding the right partner for CBD credit card processing. To help you on this journey, we've compiled a list of seven qualities you should look for in a payment processing partner for a CBD merchant account.
1. A Thorough Merchant Account Approval Process
Many people think that faster is better, but that's not necessarily true when it comes to applying for a CBD merchant account. Some credit card companies quickly process applications for new merchant accounts, only to later realize the business sells products outside of their typical risk profile or sells more of them than they originally thought when the business owner completed the application. When this happens, the business is at risk of not being able to process payments.
When applying for a CBD merchant account, make sure the payment processor thoroughly underwrites new accounts and performs enhanced due diligence. Providing additional information about the products you sell, their chemical makeup and how you market them might seem tedious, but it will benefit your business in the long run.
Instant approvals are great for other types of businesses looking to accept payments, but be wary of them if you sell CBD. If your business does not consistently meet the processor's guidelines for the sale of CBD and related products, your account could suddenly be subject to a freeze, hold or termination.
2. Is Backed by a Sponsor Bank that Understands CBD
As you probably know, it's not uncommon for businesses that sell CBD to be able to accept credit cards one day, only to find out later down the road that their processor suddenly views them as being too high risk and can no longer support them.
That's why it's important that you have confidence in all parties responsible for facilitating the transaction. It's also why not every credit card processor is able to offer CBD merchant accounts.
Whether or not a payment processor can offer CBD merchant accounts depends on several factors, including the tolerance for risk of their sponsor bank. Sponsor banks handle various activities, including making sure business owners get their money and that the card brands and issuing banks get their share of interchange fees which cover the costs associated with providing secure payment processing services.
At Clearent, we work closely with our sponsor bank to make sure that we have the proper underwriting controls in place. This gives you the confidence you need to focus on your business, instead of worrying that they might drop your account without warning.
3. Is an Expert on Federal, State & Industry CBD Regulations
When you sell CBD, it's imperative that your processor stays current on Federal, state and local laws, as well as key regulations governing the sale of CBD-related products. Simply being ”up to speed” in these areas is not good enough. Your processor must be an expert and should be able to help you understand the nuances so you can avoid unexpected payment processing shutdowns and surprise fines.
Clearent is not just a full service payments provider. We're also experts on CBD regulations and legislation. This means you no longer need to have multiple parties involved to process payments and receive guidance on staying compliant. Clearent offers you upfront guidance and ongoing support so you can properly navigate how to accept credit card payments for CBD.
4. Deliver Transparent, Competitive Rates
There are many processors who take advantage of businesses that sell CBD because they know it's not as easy for you to get a merchant account. Exceptionally high fees, pricing tricks and frequent rate hikes are some of the ways they do this.
This is where the reputation of your processor comes into play. You need a partner for payments that is honest and offers transparent pricing with no hidden fees. You should always be able to tell how much you are paying and why.
5. Provide Surcharging or Cash Discounting Programs to Help Offset Processing Costs
In addition to getting fair, competitive rates, you should also have access to programs that can help offset your processing fees. One way to do this is with enhanced pricing programs like cash discounting and surcharging. These programs are great examples of how you can legally share your processing fees with your customers and protect your profits.
Take for example Clearent's Empower program, which allows you to offset your credit card processing fees by passing along up to 4% of your processing costs to your customer with cash discounting or surcharging. Better yet, with Clearent's Empower program you can access compliance experts and free in-store signage to help get your program up and running fast. The average merchant that participates in the Empower program saves $10,000 a year. These are real savings you can reinvest in your business to help it grow.
6. Offer Omni-Channel Solutions
If you want to grow your business, you have to be able to meet your customers where they are, whether that's in person in your store, online, at an event or more. Not all CBD payment processors are able to process payments across all channels. Have a clear plan for where you want to sell your product, both now and in the future as your business grows and matures. Then make sure your partner is able to help you meet those goals.
7. Is Forward-Thinking
The CBD industry has been left behind when it comes to payment processing. That's why as changing legislation opens doors for businesses that sell CBD and related products, processors should evolve and expand their programs and technology accordingly. Make sure you're set up for success, both now and in the future, by choosing a forward-thinking partner that will offer you more ways to grow and compete.
This is why Clearent continually invests in the CBD industry, creating secure and compliant programs that make it easier to do business and become more profitable. But most importantly, we aren't done yet.
Remember, selling CBD no longer has to come with costly surprises or high processing rates. Compliant, affordable solutions for CBD credit card processing are out there. You just need to do your homework and find a partner that you can trust.
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This information does not, and is not intended to, constitute legal advice and is provided for informational purposes only. Contact your attorney to obtain advice with respect to any particular legal matter.