Hiring a CBD Payment Processor Can Boost an Online Presence — at a Premium

By William Sumner, Hemp Content Manager, New Frontier Data

Though the 2018 Farm Bill legalized hemp nationwide, it is no simple task to sell hemp products online, and particularly not for hemp CBD. Though federally legal, the hemp industry awaits more clarity in guidance from the Food and Drug Administration (FDA), in terms of how to sell and market CBD under regulatory compliance.

Meanwhile, many payment processors are reluctant to take on CBD brands as clients. For marketers looking to persist and succeed with online sales, there are nevertheless some strategies to pursue.

High Risk and High Fees

Payment processors who do accept CBD brands will often require a high-risk merchant account, typically reserved for companies or industries with a higher chance of issuing refunds or chargebacks (such as online gaming, or adult products and services). Some companies specialize in catering to high-risk merchant accounts.

While each CBD payment processor is different, rates for high-risk merchant accounts can range between 3%-9% per transaction, with rates depending on external risk factors. Some companies charge additional fees for each transaction, usually between $0.10 and $0.25 per transaction.

In selecting a CBD payment processor, retailers should note their fee structure, and whether such includes compliance fees, statement fees, and monthly or annual fees, all of which can add up for anyone entering an agreement without first reading some fine print.

Software Integration is a Must

Finding a CBD payment processor which integrates with leading e-commerce platforms on the market is a must. Some payment processors will try to pressure sellers to sign up for their own platform, though odds in the long run favor finding an integrated solution.

Advantages of selecting a processor that integrates with platform likes Shopify or Apple Pay come in the convenience for switching from different payment processors and scaling the business in the future. Anyone running a brick-and-mortar store as well as an online shop should consider whether this provider also offers point-of-sale (POS) integration.

Check the Customer Service Reputation

In selecting a payment processor, a track record for good customer service can be a start.  A seller should understand how a potential operations partner deals with issues like refunds and charging disputes, since the interaction can leave impressions whether positive or negative.

Scrutinize the Contract

While many payment processors have phased out long-term, automatically renewing contracts and early termination fees, those remain common for high-risk merchant accounts. A seller should aim to negotiate a month-to-month contract or at least a smaller termination fee. When those fail to work, some processors will do their best to match their competitors’ prices, so comparison shopping can be useful.

A Sampling of CBD Payment Processors

PaymentCloud specializes in high-risk merchant accounts, with a dedicated account representative provided to each of its clients. For now, only check-by-phone payment solutions are available, though the company promises to soon start processing credit cards for CBD clients.

Based in Los Angeles, eMerchantBroker aims to provide low-cost payment processing solutions and free cost comparisons. Additionally, the company offers credit card processing, ACH processing, an online payment gateway, merchant cash advance, and chargeback management systems.

Square is among the most popular payment processors. According to MarketWatch, while most payment processors do not advertise their rate for CBD clients, Square charges CBD clients 3.9% plus $0.10 per transaction for in-person transactions, and 4.2% plus $0.30 per transaction for online purchases.

Other payment processors include:

New Frontier Data makes no claim or endorsement regarding CBD payment processors, but encourages due diligence in any consideration of a commitment.