If you’re searching for a means to sell CBD products online, you’re probably already aware of cannabidiol’s growing popularity, particularly in the health and wellness industry. Moreover, many online businesses also seem to incorporate CBD into their e-commerce stores. But is this any surprise for a market already generating upwards of $4 billion in annual revenue and continues to grow? Of course not.
Before we delve deeper into that, let’s first address the gorilla in the room.
While rapidly growing, the CBD business is still considered high-risk by mainstream financial service providers and institutions. Why? We can attribute this to various reasons, including societal stigma, legal discrepancies across multiple jurisdictions, a tangle of rules that may baffle even the savviest entrepreneurs, and high chargeback rates.
As a result, traditional payment gateways tend to steer away from CBD retailers. The risks are deemed too high, resulting in a harsh reality in which CBD merchant accounts are abruptly terminated, let alone rejected.
Well, here’s where specialized payment processors like FLEX Payment Solutions come in—to help online CBD businesses process payments electronically and seamlessly.
Market Growth of the CBD Industry
Regulations and legalities for producing hemp and selling its products used to vary greatly from one state to another This was before former President Donald Trump signed the 2018 Farm Bill and the Hemp Farming Act, which made CBD products legal in all states but with a few restrictions. As such, CBD is now regulated and treated pretty much in the same way as herbal teas, essential oils, and other consumer-directed products.
The industry has seen tremendous growth since federal and local legislation loosened CBD product regulations. More and more merchants are now stocking their online store inventories and brick-and-mortar shelves with the legalized CBD products that consumers want.
As a matter of fact, the market has snowballed so rapidly that some experts are now estimating the global CBD industry’s value at around $5 billion. And with the market continuing to grow, CBD revenue is projected to reach about $16 billion by 2025 and around $50 billion over the next five years.
Between now and 2028, this industry boom is expected to have a compounded annual growth rate (CAGR) of 21.3% to 27.4%. As a result, the CBD industry is and could continue to be one of the world’s fastest-growing markets.
As the market grows dramatically, businesses in this industry face various challenges, most notably in e-commerce payment processing for CBD products. This means that to seize opportunities, particularly in selling CBD products, robust systems designed to help CBD merchants accept payments seamlessly must be put in place.
Opportunities in CBD Payment Processing
Regardless of the many issues faced, we can acknowledge that the CBD payment processing landscape provides considerable opportunities for businesses in this market.
Besides the forecasted $16 billion in CBD sales by 2025, data from the US National Library of Medicine show that the public’s interest in CBD products has increased significantly. These findings demonstrate a growing acceptance of CBD products and rising consumer demand, indicating a trend that is likely to continue.
With the industry’s popularity and acceptability, CBD payment processing opportunities also continue to multiply. And in light of all of this, CBD entrepreneurs have a chance to capitalize on this developing situation.
Key Players for CBD Payment Processing
Before going into the specifics of choosing a CBD payment processor, one must understand the fundamentals of CBD payments:
Processor
The first thing you should consider when launching a CBD business is the payment processor you’ll use. This has proven a nightmare in the past, primarily due to a shortage of payment processors, Point of Sale (POS) systems, and restrictive agreements.
Bear in mind that the more options you provide your prospective customers, the more opportunities you have. Luckily, numerous payment processors today cater to CBD payments. All you need to do is pick one that works for you.
Gateway
This is simply a merchant service offered by an e-commerce app vendor that allows for direct payment or credit card processing.
If you’re planning on selling CBD online, you might want to consider a secure payment gateway that accommodates high-risk industries. You may incur some extra fees, but at least you won’t have to worry about the likelihood of your CBD merchant account getting cancelled.
Bank
Not all forms of CBD were legalized in the 2018 Farm Bill. For that reason, CBD laws and processing procedures vary by state.
With its legality often debated and the product itself deemed as high-risk, many banks across the country continue to shy away from servicing CBD businesses. Therefore, as you look into different payment options, be sure to examine the banks you intend to use.
What to Look for in a CBD Payment Processor
When getting into the CBD market, picking out a payment processor isn’t a straightforward business decision. That said, here’s what you need to look for:
Capability to Process High-Risk Transactions
Because of the fluctuating regulations and legal ambiguities surrounding CBD, ‘high-risk’ cannabis-based product transactions tend to face more scrutiny. That’s why it’s essential to work with a payment processor like FLEX Payment Solutions, which allows for high-risk transactions.
Such a processor can help you get around the complexities associated with the CBD industry, ensuring that you complete your transactions consistently without interruptions.
Compatibility with Your E-Commerce Platform
If you operate online, like most CBD businesses, you must ensure your payment processor is compatible with your e-commerce platform. Opt for a processor with clear API availability, especially if your platform doesn’t have an official extension or connector. The setup should be simple, causing minimal disruption to your current system. The essential elements here are:
- The supported functionalities.
- Easy integration.
- The overall effect on your shopping experience and user interface. Your customers shouldn’t have to jump through hoops trying to complete a transaction.
Point of Sale (POS) Availability
Whether you aim to attend trade shows and pop-up markets or have a physical store, having a payment processor that allows for seamless integration with existing POS systems or has its own POS capabilities is a card up your sleeve. This integration is key for:
- Simplified day-to-day operations
- Real-time data updates
- Unified inventory management
FLEX Your Way to Seamless E-Commerce Payment Processing
After you’ve registered your CBD business and opened your business account, it’s time to proceed to the final stage: getting an E-Commerce Payment Processor. This should be straightforward.
But given the nature of the products you’re looking to sell, running a CBD business can prove challenging. This is why you need to partner with a secure and reliable payment processor like FLEX Payment Solutions, which boasts extensive experience in e-commerce payment processing for CBD products and other high-risk transactions. We are more than happy to guide you through the entire process of acquiring a CBD merchant account.
So, contact us today and let us help you get your CBD merchant processing right.
