CBD Merchant Accounts
With the recent legalization of cannabidiol (CBD) and other cannabis products across many states, more and more merchants are choosing to open up shop and provide consumers with both medical and recreational cannabis products, including CBD. Although many states have chosen to legalize these products, the federal government has chosen to maintain the illegal status of marijuana and cannabis products. Because of this, any merchant choosing to sell these products is considered high-risk and may have a difficult time obtaining approval for an account or payment gateway with many credit card processors. PayDiverse provides industry-leading solutions to high-risk merchants, including CBD merchants. We offer No Reserve, Fast Settlements to Merchants, and Rates Below Industry Standards.
What is CBD and Why is it High-Risk?
Cannabidiol, or CBD, is a derivative of cannabis that can be extracted from both hemp and marijuana plants. CBD is not psychoactive in it’s purest state, and when derived from the hemp plant and sold as a medicinal product, is “legal” in all states per the 2014 Farm Bill. CBD has shown to be an effective treatment for a number of ailments, including:
- Alzheimer’s disease
- Parkinson’s disease
- Multiple sclerosis
- Cancer and chemotherapy side effects
- Hyperemesis gravidarum
- Anorexia Nervosa
- Mood disorders
- Nausea and vomiting
- Pain and inflammation
CBD derived from marijuana plants has proven to be more effective medicinally, however, taking it from the marijuana plant increases the likelihood that CBD products will contain THC – the psychoactive ingredient in marijuana. THC is what makes cannabis products illegal in some states and countries, and therefore, the reason CBD merchants are considered high-risk.
Due to federal laws regarding marijuana and THC products, many banks are not willing to open accounts for CBD merchants, regardless of state laws in the merchant or bank’s primary location. CBD merchants who are lucky enough to find a bank willing to approve their applications, they are often charged high processing rates (over 6%), or will often find their accounts closed without warning, leaving the merchant unable to operate their business efficiently,
Long-Term Solutions for CBD Merchant Processing
PayDiverse is a CBD payment processor that provides CBD merchants with premium high-risk merchant services. We utilize a variety of processing techniques to ensure that CBD merchant processing is a smooth and simple process for our high-risk accounts. Some of the features of your CBD merchant account include:
- Multi-bank processing (including off-shore)
- No reserve
- Fast settlements to merchants
- Secure payment gateway
- Chargeback alerts
- Chargeback disputes
- ACH/Check 21 processing
- Fraud prevention and protection
- Competitive processing rates (below industry standards)
As a CBD payment processor, PayDiverse works hand in hand with CBD merchants to protect their businesses from account closures, fraud, and chargebacks. We offer award-winning fraud and chargeback protection and have strong relationships with over 40 banks who work with high-risk merchants both in the United States and offshore.
How Multi-Bank Processing Protects CBD Merchant Accounts
All PayDiverse high-risk merchants are provided with a minimum of four banking solutions. Credit and debit card payments are disbursed across all accounts, which can benefit merchants in a number of ways.
- Limited Exposure – by disbursing payments across multiple accounts, CBD merchants will have a lower risk of overexposure with their banks.
- Reduced Chargeback Ratio – banks typically only allow for a certain percentage of transactions to be charged back to the consumer. By using multiple banking solutions, chargeback ratios will naturally remain low.
- Avoid Losing Processing Capabilities – having multiple banking solutions means never going without processing capabilities. In the event of account closure by one bank, our CBD merchants will have at least three backup banks to rely on.
Award-Winning Fraud Prevention
CBD merchants are at a particularly high risk for consumer fraud. Customers may use stolen cards or initiate fraudulent chargebacks to avoid being associated with the purchase of cannabis and hemp products. PayDiverse offers our CBD and other high-risk merchants award-winning fraud prevention and protection.
Our secure payment gateway is designed to analyze hundreds of data points including behavioral analytics, machine learning models, elastic order linking and advanced proxy detection methods. This allows merchants to detect fraud in real time and stop it in its tracks. Merchants can customize filters and rules in their payment gateway to automatically decline or suspend suspicious transactions pending further investigation.
Our multi-bank processing capabilities help high-risk merchants prevent high chargeback ratios, but we also work hard to help our CBD merchants protect their bottom line by preventing unnecessary chargebacks. With real-time, round-the-clock chargeback alerts, CBD merchants can view and analyze chargebacks as soon as they are initiated. PayDiverse provides merchants with technology designed to identify vulnerabilities within their system to limit instances of unjustified chargebacks.
When chargebacks appear fraudulent or unwarranted, merchants can instantly file a dispute. We provide support during the dispute process and provide all the necessary tool for our merchants to reclaim the money that is rightfully theirs.
Some ways CBD merchants can prevent fraudulent chargebacks on their own include:
- Train employees to ask for photo identification with all credit card transactions and have them double check that the name is the same on both cards. Remember, a merchant is within their rights to refuse any transaction that they deem suspicious.
- Retain all credit and debit card receipts. File them with care and keep them easily accessible in case a chargeback is initiated and proof of the transaction is required.
- Utilize time-stamped video surveillance for the cash register area. Be sure that the video captures the customers’ faces. This can be used to cross-reference with the time stamp on the credit card transaction and provided as additional evidence in disputing chargebacks.
- Never process any transaction that is suspected of being fraudulent without confirming the information with both the customer and card-issuer.
The Future of CBD Merchants
As CBD and other hemp and cannabis products move toward the mainstream and become legal to use both medically and recreationally in more places, it is likely that banks will be more accepting of CBD merchants. That being said, it is likely that credit card processors will always consider CBD merchants to be high risk alongside pharmaceutical companies and liquor stores.
Keeping CBD Merchant Accounts in Good Standing
As a new industry, it is important that CBD merchants maintain their accounts with banks and credit card processors. Building good histories will increase the likelihood that banks eventually see CBD merchants as a legitimate and viable business that they are willing to work with. Some things merchants can do to keep their accounts in good standing include:
- Maintain a good history with credit card processors
- Consistently perform a high sales volume
- Keep a high balance in business accounts
- Dispute chargebacks whenever possible and back up disputes with strong evidence
- Remain transparent in all communications with your banks and payment processor
Adhering to these standards is something any business should strive for, however, in a new, high-risk industry, it is more important than ever. Today’s CBD merchants are pioneers in their industry, meaning the way they handle their financial accounts will set the standard for how banks choose to work with merchants in this industry for years to come.
In addition to creating a better name for the industry, merchants who keep their accounts in good standing increases the chances of raising their sales potential and processing limits.
How to Apply for a High-Risk CBD Merchant Account
PayDiverse looks forward to providing your CBD business with industry leading payment processing solutions and award-winning fraud prevention tools. Applying for your high-risk merchant account is a simple online process, and we can have you up and running with our full range of services within 48 hours of your approval. To apply for your high-risk CBD merchant account:
- Apply online using our secure form
- Digitally sign your application
- Submit your supporting documents
That’s it! Once we’ve received your application and all supporting documents, we will review your information and provide you with an answer within 24 hours.
After you’ve received your approval, we will provide you with everything you need to begin processing credit card and debit card payments within 48 hours. You will be set up with fraud prevention that is fully integrated into your payment gateway, as well as access to our online portal where you will be able to fully manage your account and monitor fraud and chargebacks.
To increase the likelihood of approval, be sure to complete all questions on your application form. All answers provided must be truthful to the best of your knowledge. Our underwriters will verify the accuracy of all information provided. Keeping your account balances high will verify your abilities to keep accounts in good standing. Additionally, a well-constructed business plan, competent ownership, and an excellent processing history will increase your chances of opening a CBD merchant account with PayDiverse.
Diverse Payment Processing is Smart Processing
Fill out our free and quick merchant account application and let us match you with many banks that want your business.