CBD businesses face an uphill battle when it comes to incorporating reliable payment solutions in their stores. In fact, cash is often the only option available to them and their customers. For any business these days, however, the ability to accept credit or debit cards is a necessity. The reason for these payment processing hurdles is largely due to concerns about liability and a lack of knowledge about the legal environment the CBD industry finds itself in.
Some major banks and credit card companies aren’t willing to accept the risk, or what they perceive as the risk, and this leaves CBD businesses unable to fulfill their customers’ needs. The reality is that the CBD industry has huge growth potential, and companies that are able to successfully find a payment solution partner are set to gain a great competitive advantage.
Frankly put, CBD customers aren’t going away and will hop from business to business until they find one able to answer all of their payment needs.
It’s in the best interests of CBD business owners to find a reliable payment processing partner that understands their business. One that is able to help them accept multiple forms of payment for their products.
First, let’s try to understand the essentials for CBD compliance and what to look for in your payment solutions provider.
Know the legalities of selling CBD products
If you’re reading this, then chances are you already know the ins and outs of what CBD is. However, it is important to outline some of the gray areas around CBD compliance. For instance, depending on your state and local laws, you may be required to carry certain licenses and even have your products tested in approved labs prior to selling.
It’s important that you know these laws because payment processing companies will need to verify that your company follows the proper legalities in order to onboard you as a customer.
As payment solution companies rely on the relationships they’ve built with banks, they have a vested interest in only working with companies that they trust. These payment processing companies are able to take more risks and innovate more freely than bigger credit or payment providers. But, like any company, their reputation is at stake with every client they take on.
Therefore, if your CBD business is found lacking in its compliance efforts, finding a payment solutions partner could prove more difficult. A good payment solutions partner should be able to help your company navigate these legal waters, but if you have any immediate questions, the FDA website is a great tool available to all.
Fraud is a major concern
The CBD industry is fraught with fraud. Deception not only exists in some products but also in payment processing due to payment card fraud or chargebacks. These issues can’t be ignored and offer even more reasons for CBD businesses to partner with a trusted payment processor that is used to dealing with high-risk transactions.
Companies that do business in these industries are often faced with higher fees and some payment processing companies might take advantage of this. Other payment providers have even gone as far as to make promises in the beginning that they can’t deliver on. This leads to frustration, breach of trust, and of course, loss of money for the CBD business.
When you’re considering working with a payment solutions company or credit provider, it’s important to do your homework on the company and ask a lot of questions.
How you market matters
Understanding how to market in your industry is important for any business owner. But with the level of misunderstanding and legal gray areas facing the CBD industry, it’s even more important. CBD companies face many restrictions when marketing on social and digital platforms and have to be extra critical in how they handle market claims, testimonials and reviews.
When taking on a payment processing partner, consider whether your company’s marketing efforts remain in compliance. Not only is your reputation as a company at stake, but that of your payment solutions partner as well. Again, the FDA website is a great resource for understanding the marketing options available to your business.
Not all payment options are created equal
Most major payment companies, including credit cards Mastercard and Visa, and sites that cater to online sales like PayPal or Stripe, won’t directly accept payment for CBD products. Also, as previously discussed, there are some payment solutions companies out there trying to take advantage of businesses in high-risk verticals.
It is important to only work with reputable companies that have a history of helping other businesses in your industry. Companies that deliver exactly what they promise, and are dedicated to providing the support you need. Not just in accepting payments but in other aspects of your business. Carefully consider your options to avoid the risk of lost funds, penalties, and frustration.
Regulation varies from state to state
Finally, it’s important to understand local and state regulations. As these laws shift and change regularly, a well-informed partner can provide essential guidance to help your business understand those regulations, allowing you to focus on growing your business. A great non-partisan resource that is updated regularly can be found on procon.org.
In spite of the many restrictions, changing policies and a limited number of payment solutions providers, there are companies out there that can help. One of those is FLEX Payment Solutions. We strive to offer our clients the custom processing solutions necessary to operate efficiently while providing unprecedented customer service. We have a unique compliance background, innovative business model and special banking relationships that will not only save your CBD business money but will help your business grow.
Our services are available to any legal business types, including state and Native American tribal lending and hemp-derived CBD. If you’re interested in partnering with a company dedicated to helping your business grow, we’d love to hear from you.