Cannabidiol (CBD) has seen rising in popularity in recent years and is the first medicine derived from cannabis to be approved by the FDA. It’s no surprise, then, that CBD businesses need more versatile and convenient payment options to meet the needs of their diverse customer base. Here are the ins and outs of payment processing for your CBD store, so you can make an informed choice about which merchant account for CBD businesses you want to use.
What makes CBD payment processing unique?
As far as the payment infrastructure is concerned, processing payments for CBD products is the same as with other products. However, there are some risks for the “high-risk” or specialty payment processor handling the transaction.
Specifically, whether your processor can assist you with selling CBD products depends on whether your product conforms to government regulations. For example, the Food and Drug Administration (FDA) strictly limits the kinds of products that can be sold in interstate commerce, so before you choose a payment provider, you have to be sure your product conforms to the FDA’s guidelines.
For instance, here are some things that could prevent a CBD payment processor from partnering with you to sell your CBD product.
- You claim your CBD-based product is a dietary supplement. (Selling either CBD or THC products as dietary supplements is prohibited.)
- You add CBD to a food and then offer that food for sale.
- You claim your CBD product is approved by the FDA, but it’s not Epidiolex, Marinol, or Syndros. At the time of writing, these are the only three CBD-based products approved by the FDA. If your marketing collateral claims otherwise, your payment processor may not be able to work with you.
The key elements of CBD payment processing.
Despite the relatively few limitations listed above, there are thousands of CBD products you can sell online, in-person, and over the phone via retail merchant services. Here’s a breakdown of what’s involved, according to the kind of payment.
- Mobile payments. With mobile payments, your customer presents a mobile device, such as a cell phone, that has an app in it that connects to a digital wallet with funds backed by their bank or other financial institution. The app interfaces with your payment processing system, exchanging pricing information with your POS solution.
- Online payments with a credit card. When a CBD customer — or any customer — places an order online, their credit card information gets encrypted and sent to the payment processing system. All personal and financial data is unreadable while in transit and can only be deciphered by the payment system thanks to a private key that decrypts the data.
- In-person credit card payments. A CBD merchant account allows you to securely accept credit cards from customers at a physical location. Payment data is transferred either through a magnetic strip when they swipe their card or via the card’s chip. If your customers use EMV chip cards, they may feel safer because the chip payment system gets encrypted. But as long as your POS system hasn’t been compromised by a hacker, both methods are equally secure.
What to look for in a payment processor.
One of your primary considerations when choosing a CBD oil payment processing partner should be how well the company can detect fraud and investigate — and limit — chargebacks. Also, you should receive accurate, timely reports regarding sales data, approvals, and chargebacks.
Ideally, you want a company with an internal chargeback management team and an automated, email-based alert system. In this way, the company personally handles any issues that arise. This makes for a more thorough investigation because they have access to all the relevant data they need to quickly get to the bottom of a matter. Add to that analytics-based transaction data that gives you an ongoing, accurate record of how your CBD product sales are going.
Humboldt Merchant Services (HBMS) delivers straightforward, easy payment experiences for customers, supporting your CBD product revenue stream. Whether you’re new to selling CBD or have been looking for another payment acceptance partner, HBMS has the internal infrastructure and experience to suit your CBD business. Learn more by connecting with HBMS today.
