With the speed at which the CBD industry has been growing in recent time, a lot of unique challenges have popped up.
One of the biggest challenges with the CBD industry right now is the constant search for a reliable payment processor that effectively processes payments without roadblocks or obstacles.
A lot of CBD businesses have been facing issues with processors like Stripe at the moment because when these generic services find out they are being used in the CBD industry, they will terminate services.
Let’s break down how to navigate this and what we can do to solve this problem.
Given the recent rise in popularity of CBD products due to health benefits as well as increased hospitability towards legalization and recreational use, there has been a formation of some gray areas in the industry that can make the aspect of processing payments difficult.
A lot of these challenges come from generic payment processors - think PayPal, Stripe, and some other platforms.
A lot of these services will restrict use or even ban use for CBD sales, which can be extremely frustrating for a dispensary that’s looking to process their payments hassle-free. The reason for this looks to be a disconnect between the legal/widespread social acceptance of cannabis-based products and the perception of the processing companies.
This can cause a frustrating loss of revenue for CBD businesses, including random and abrupt freezing of accounts and termination. This can lead to immediate loss of profits and ruin customer trust.
That’s why we need to fix it.
Given the problems we face with generic processors, our next step needs to be migrating to a specialized solution that is specifically made for this industry.
Processors that are CBD-friendly have an understanding of the law and stick to legal regulations while also making the process seamless for CBD dispensaries.
These services will decrease the odds of your account being spontaneously frozen or payments not going through.
They also have a lot more comprehensive customer support and offer specialized solutions to individual CBD distributors, something that PayPal and Stripe don’t do.
When looking to actually commit to a CBD payment processor, it’s imperative that you take your time and assess the decision thoroughly.
Some main features to look for include the processor’s knowledge of laws in the industry, as well as avoiding secret fees and hidden charges. Some processors might seem cheap upfront, but then have caveats that come up which make the ordeal much more complicated.
You’ll want to also seek out a processor that integrates smoothly with whatever existing e-commerce platforms you’re using, as well as something that has encrypted systems for privacy.
One of the first things we’re going to need to do before making the transition to a different processor is figuring out our volume - how much business are we doing currently?
Evaluate your demographics as well as your long-term growth strategy. You’ll want to make sure that the processor you pick is qualified to run your business in the long run. This includes looking for processors that support international currencies, if you plan on expanding worldwide.
Also, try to ensure that the platform you pick makes sense from a fee-standpoint, as given the tight margins in the CBD industry as is, we don’t want to make it any worse with a platform that keeps chipping away at our profit with excessive fees.
One of perhaps the biggest things to look for is a solution with fraud detection, which would better secure customer information and business data.
You’re going to want to do a lot of research and identify payment services that are actually hospitable towards the CBD industry and not just looking to ban you.
Ultimately, the CBD industry can be a tricky one to navigate, given that the payment processing situation has gotten difficult in recent years.
As CBD dispensaries pop up and laws change over time, it’s quite possible that the situation with larger, more generic payment processors will improve. However, at the moment, there’s just a little too much gray area.
It looks like these gray areas could be cleared up with clear legislation that permits the buying and selling of cannabis products online through services like PayPal, but until then - we have to do with what we have.
That’s why it’s so important to pick the right CBD-based payment processor.
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