The dawn of the lucrative CBD marketplace is taking ecommerce by storm. It’s no wonder that you want to throw your entrepreneurial hat into this lucrative ring as well. Before you do, you must understand some of the lesser-known facts about payment processing for CBD businesses so that you can make the best decisions to carry your fledgling company forward.
Brief background about CBD.
Until the Farm Bill was signed into law by President Trump in 2018, all cannabis products were banned. Then the passage of that legislation made items made from industrial hemp federally legal — as long as they contained no more than 0.3% THC (the psychedelic ingredient that produces the high typically associated with marijuana).
Ultimately, ecommerce businesses have been allowed to sell hemp-derived CBD products, including edibles, even though they remain in somewhat of a gray area with the folks in Washington, D.C. These days, internet merchants are garnering a great deal of success selling everything from edibles to oils and a host of other wellness-related merchandise.
Marketing your CBD website.
Getting the word out about the wellness products and CBD oils or tinctures that you are selling can bring with it challenges of its own. Specifically, you need to exercise extreme caution about the claims you make.
You might have compelling reasons to believe that the CBD gummies and topicals in your inventory can make a marked, positive difference in the quality of life of your customers. This commitment to wellness may even be one of the reasons you decided to enter the CBD field. However, you can never make health claims about any of the merchandise you sell. Doing so can put you on the wrong side of the Food and Drug Administration.
Getting set up to accept customer payments.
Once you lock in your business plan and advertising strategies, you need to figure out how your customers will be paying you. That will mean partnering with a company with expertise in payment processing for CBD businesses. But how do you find the right CBD merchant account to meet your business’s current and future needs? We hope the following tips will be helpful.
Understand your high-risk status.
As soon as you put your business out there as a seller of CBD products of any kind, you will automatically be placed by account providers into the “high-risk business” category. For the most part, this is because the regulations around CBD remain unclear, making providers a little squeamish. Add to that the age restrictions associated with these products, and this designation is something you can’t avoid. Therefore, take it as a matter of course that you will pay higher per-transaction and monthly fees and will undergo greater scrutiny during the application process.
Find a high-risk merchant account provider.
As you search for the best payment provider to partner with, one question that should be at the top of your mind is whether the candidate has demonstrated experience with high-risk merchant accounts. As such, they will be accustomed to helping you navigate the more complex selling environment CBD finds itself in, including the likelihood that you will encounter more chargebacks than a conventional business would.
Look for ease of integration.
Even though you are considered to be a high-risk business, that doesn’t mean you need to switch your existing ecommerce payment platform. Make sure the merchant account company you choose lets you integrate their credit card processing software into your current ecosystem. Many CBD merchants elect to go with providers that use API payment gateways because these types of platforms let merchants monitor their own performance and allow for a degree of customization.
POS integration.
If you already run a non-CBD business, you probably already know how powerful your point of sale system can be. It not only aids in the secure processing of payments but also is integral to numerous other business functions. These include employee and inventory management, customer loyalty, report generation, and integration with financial and other third-party software. A good CBD payment processor should provide you with the POS integration that lets you continue to optimize the many segments of your business operations electronically.
Look for reasonable fees and contracts.
Yes, you will pay more for high-risk business payment processing, but that doesn’t mean you need to break the bank. Look carefully at several payment service providers, understanding that the cheapest is not always the best. By the same token, you don’t necessarily need to sign protracted contracts or suffer with elevated statement, compliance, noncompliance, terminal, monthly, and/or annual fees. Negotiation is possible, so do your homework.
The skyrocketing success of CBD products since 2018 suggests nothing but more growth and potential for success for entrepreneurs who understand the intricacies of this industry. Conducting careful research and partnering with quality companies now will help you to have the best chance for ongoing success in this steeply competitive commercial space.
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