Finding the Best CBD Payment Processors: Capitalize on the Profit Potential of Hemp-Derived Products (2020)
If you’re looking for a way to sell your CBD products online, chances are you already know a lot about cannabidiol and the popularity it is gaining in the world of health and wellness.
An influx of online businesses are introducing CBD into their ecommerce stores. As an industry poised to harvest $16 billion in revenue by 2025, is it any wonder why?
Since the passing of the 2018 Farm Bill, which was signed into effect by President Donald Trump in December 2018 and removed hemp from the definition of marijuana under the Controlled Substances Act (CSA), an increasing number of ecommerce business owners are searching for payment gateways that allow CBD merchant processing.
In an effort to meet consumer demand for CBD products, such as oils, capsules, supplements and topical solutions, the non-psychoactive cannabinoid is being stocked inside an ever-growing number of brick-and-mortar shops and online ecommerce stores.
With the CBD therapeutics segment alone on-track to earn $9.30 billion in 2026, growing at a CAGR of 27.4%, there’s a lot of money to be made in this industry. However, getting involved in such a high-risk sector means that you’ll need to make yourself aware of what is required to conduct CBD business transactions legally.
What is CBD?
It might be almost 80 years since CBD was first discovered, but there’s still a lot to learn about this unique chemical compound.
Back in 1940, Dr. Roger Adams and a group of scientists from the University of Illinois successfully identified the non-psychoactive cannabinoid for the very first time. Some 23 years later, scientists managed to assess its structure in clarity.
Ultimately, this kick-started plenty of research into a molecule that has since been hailed a medical marvel ingredient.
CBD occurs naturally in marijuana and hemp plants, but the vast majority of products filtering into the mainstream market are created using industrial hemp plants.
Although CBD boasts a fairly long history, it has never been discussed quite as much as it is nowadays.
In fact, CBD was exposed 20 years before the cannabis plant’s primary psychoactive cannabinoid THC was. Thanks to innovations in technology, scientists have been able to dig a little deeper into CBD’s therapeutic potential as of late, which has led to it overtaking cannabis’ high-inducing chemical THC in terms of what’s being talked about and researched.
This is not to say that THC does not possess therapeutic qualities — but for now, the world is paying close attention to CBD, since users need not experience mind-altering effects to reap the rewards.
Notwithstanding, unproven health claims are prohibited by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) due to the risk of merchants making false claims and promises to consumers that could deter them from seeking professional medical care, merchants are limited to using a high-risk CBD payment processor.
Is CBD Legal?
CBD’s high risk, combined with the fact that marijuana remains illegal at the federal level, makes the task of accepting online payments fairly restrictive for sellers.
“Marijuana-derived” CBD is not legal at the governmental level. “Marijuana” or “cannabis” as it is more commonly known is a part of the cannabis family, just like hemp. The difference is that cannabis grows with more than 0.3% THC; the plant’s psychoactive element.
Confusion between the two plants has caused controversy among hemp business owners who have struggled to find processing solutions that are willing to accept online ecommerce payments for CBD-containing products.
Even if your ecommerce business specializes in the sale of hemp-derived CBD, you will still need to seek out a reputable CBD payment processor that is equipped to handle high-risk transactions.
As an industry that is undergoing constant metamorphosis in the legal aspect, you would benefit from staying on top of the evolving legal cannabis landscape across the U.S. For an up-to-date status by state, get in the habit of checking reputable online resources like this one.
CBD Requires High-Risk Processors
Albeit legal in most forms throughout much of the U.S., CBD is a high-risk industry. The FDA is still straightening out regulatory framework for this industry, with the majority of regulations still unclear.
Not to worry — because so long as you are prepared, you can dodge potential financial predicaments and find success with your online/offline CBD store.
On the other hand, you simply cannot ignore the fact that CBD’s strict regulation puts all products containing the cannabinoid in a high-risk category. As a result, many payment processors will be reluctant to work with CBD companies.
Shady manufacturers looking to make a quick buck are ruining it for everybody else by deterring payment processors from working with CBD sellers for online transactions.
The solution? Finding a high-risk processor who is not afraid to assist you with a payment gateway that ensures you can conduct business just like any low-risk company is able to.
BigCommerce knows how to handle high-risk businesses, such as those associated with the CBD industry. We indulge business owners with more than 65 payment gateways that can be utilized to conduct transactions in over 100 countries. BigCommerce also invites high-risk companies to facilitate business transactions with more than 250 local payment methods.
Although the payment gateways made available to your business will depend on the country in which your company is registered and also, the currency that you use. However, whatever the gateway, we ensure that it can be digitally integrated with a range of popular payment technologies like Apple Pay, Amazon Pay and PayPal, to name a few. We talk now about this below.
What to Look for in a CBD Payment Processing Gateway
In 2018, investment firm Cowen investment claimed that retail sales of CBD consumer products in the U.S. ranged from $600 million-$2 billion.
Brightfield Group anticipates global CBD sales will grow to approximately $22 billion by 2022.
Such extortionate predictions mean that an increasing number of ecommerce businesses are scrambling to find a CBD payment processor willing to accept them.
Here’s what you need to look for prior to opening a CBD merchant account:
1. High-risk availability.
It is imperative that your CBD payment processor is able to deal with high-risk transactions.
The reason for this is because the fairly new industry is prone to payment card fraud and charge-backs. As an industry that hovers around a legal grey area, only a handful of CBD payment processing services will be willing to take the risks associated with this type of transaction.
Be on the lookout for a company that boasts extensive experience in aiding businesses operating within a high-risk sector.
Some other high-risk industries that will demand gateway payment systems include:
- Adult products and services,
- online dating,
- online gaming,
- Bitcoin trading,
- travel services,
- vaporizer and e-cigarette companies,
2. Easy integrations.
Nobody wants to hear that they are being forced to switch their ecommerce site to a brand new platform in order to integrate a CBD payment processor.
This can be incredibly time-consuming and also, very deflating; particularly if you’ve invested a lot of money and effort into perfecting the way your online cannabis or hemp shop looks to your customers.
With that being said, it is best to refrain from using a CBD merchant processing system that requires you to use their existing platform. Instead, opt for a company that enables you to integrate their CBD credit card processing system seamlessly with a broad scope of ecommerce software.
Companies that can offer these services will be the ones to do business with, since they will be capable of supporting you as your company thrives.
A significant portion of CBD payment processors will operate using API integration, which is the most common payment gateway of them all. A major benefit of using API is that a payment gateway of this kind can be monitored by you, the business owner, as well as provide you with an insight into how the ecommerce store looks from a customer’s perspective.
3. POS availability.
Save yourself time on administrative duties and cut the cost of in-office work by finding a CBD payment processor with point-of-sale (POS) availability.
Processors with POS system integration will be able to assist you in managing both online and offline transactions. With accurate reporting gleaned from POS software, store profitability can be increased, as well as customer loyalty, business intelligence and ease of access to your sales portal.
POS software will also aid you in making lucrative business choices. What’s more, this type of software can be used to control stock input and output from a single location.
4. Low fees.
As the old saying goes, “You have to spend money to make money,” but just how true is this quote?
When it comes to finding a reliable CBD payment processor, you will not be limited to companies that charge a hefty upfront fee. Although the more well-established companies may require a fee from account holders upon registration, many will provide their services free of charge or for an affordable rate.
Ask yourself if you can afford to pay the specific percentage that your preferred payment gateway will deduct from you for each transaction. If it does not work well with your profit margins, search for a service provider elsewhere.
Keep in mind that credit transactions may be more expensive than debit card transactions.
There are also a number of other fees to take into consideration when selecting a CBD payment processor, such as:
- Statement fees,
- Compliance fees,
- Non-compliance fees,
- Terminal fees,
- Monthly/annual fees
Chargebacks may also accrue additional fees, so it would be in your best interest to confirm this prior to establishing a partnership with CBD merchant processing companies.
5. Reasonable contracts.
Not every payment processor will require you to sign a contract that is binding in order to do business. Each company’s fees and contracts will differ, so allow yourself enough time to ponder over which one suits your CBD company the best.
It is advisable to stay away from companies that will only establish long-term partnerships, particularly if they do not have sufficient testimonials to back-up their claims.
In the event that a company catches your eye, but will only offer a partnership under the condition that you fork over an ETF (early termination fee) if you choose to go elsewhere, prepare to negotiate.
6. Customer support.
You simply must be prepared for the worst case scenario when it comes to dealing with online and offline transactions for CBD-related products.
For example, if a customer wants to issue a $200 chargeback on a recently submitted order, you need to understand exactly how these types of situations will be handled by your chosen CBD payment processor’s customer service team. After all, the level of service they provide will reflect on you as a business.
Before you choose a payment gateway, ask a member of the team how they go about handling disputes, as well as how fraud protection will minimize the chances of disputes arising in the first place.
Personalized customer service is the way to go, but if you cannot find a company that offers this, at least find one that hires a customer service team to manage calls and emails around the clock.
8 of the Best CBD Payment Processors
Competition is stiff in the CBD industry, so you need to be at the top of your game if you want to maximize profit potential and customer retention rates.
A CBD payment processor can provide the perfect tailored solution for your business, while eliminating the hassles associated with administrative tasks, accounting and business upkeep.
The following top-rated companies have branched out into the CBD industry with their payment gateway services:
This leading payment gateway service provider is PCI-certified. Since the company’s inception in 1998, USAePay has been providing businesses in every niche with ecommerce, retail and telephone/mail order solutions.
- Integratable with the BigCommerce platform
- Custom features and tailor-made solutions
- Optimized user experience
- Good customer support
- Newly designed virtual terminal
- Hardware is slightly outdated, but still efficient
- Vertical market
- Merchant console
- Event ticketing
- Report customization
- Fraud module setup
Presenting clients with a unified commerce strategy, this CBD payment professor supports various payment methods including ACH, credit cards and debit cards. NMI provides detailed insights into transactions, of which can be managed in conjunction with BigCommerce.
- Integratable with the BigCommerce platform
- Offers global payment options
- Supports ACH, credit cards and debit card
- Fast payment turnaround
- Multiple MID capabilities
- Monthly fee of $10 required
- $0.05 fee per transaction
- Virtual terminal
- Free shopping cart
- Recurring billing feature
- Report generation
- Merchant control panel
- QuickClick shopping cart
Next on the list is this high-risk payment processor, which is acknowledged as the most well-respected service provider specializing in the CBD industry.
- Seamless integration with most platforms
- Affordable rates as low as 2.49%
- Fast approval and pre-approval within six hours
- Direct network of over 20 banks and PSP’s
- Can be tricky to handle multiple tasks at once using the fairly complex interface
- Mobile solutions
- Offshore merchant accounts
- Online credit card payment processing
- Mail order
- Telephone order
- Cross-border transactions
- Level 2 and 3 credit card processing
- Recurring billing
- Virtual terminal
- Fraud prevention
While this CBD payment processor might only offer a minimum of $50,000 of monthly processing for offshore accounts, the payment gateway service is ideal for startup businesses looking to get their feet off the ground.
- Capable of processing high ticket volumes
- Offshore merchant accounts
- Reasonable pricing
- Fair contract terms
- Top-notch customer service
- Requires minimum $50,000 monthly processing volume for offshore accounts
- Lacks information regarding POS systems and CBD credit card processing
- Currently, no mobile processing system exists
- International and offshore banking; 15 banking relationships
- Chargeback prevention software
- ACH & virtual check services
- Fraud monitoring software
Perhaps the most well-established CBD payment processor on the list so far is this one, which launched back in the year 2000.
Easy Pay Direct utilizes an EPD Gateway that serves not only high-risk companies in the CBD, cannabis and hemp industries but also, low-risk companies in all sectors.
Easy Pay Direct links account holders with credit card processors or domestic banks, depending on their requirements.
- No early termination fee
- Load-balancing feature allows account holders to process higher monthly payments
- High-quality proprietary payment gateway
- Zero complaints on their website
- Setup fee of $99 is required to create an account
- $29.99 monthly account fee required
- Premium fee is required to fund account fees and processing rates; flat fee 3.95% + $0.25 per transaction
- Account holders are tied to a three-year contract with automatic renewal clause at one-year intervals
- Poor level of customer support, based on the reviews
- Retail swipe software
- PCI compliant
- Online shopping carts for simple transactions
- Direct mobile payments
- No early termination fee
- 24-hour customer service support options.
Although a small provider, PayWize knows what’s up in regards to the financial predicaments faced by businesses operating in the CBD industry.
The company, which is affiliated with Payment Depot, might have only started in 2017, but they have already provided CBD merchant processing to a long list of CBD oil merchants and medical cannabis dispensaries throughout the U.S.
- Guarantees flat-rate pricing for CBD payment processing
- Compatible with various ecommerce platforms and websites
- Month-to-month billing option
- Broad compatibility with third-party shopping carts
- Merchant feedback is currently limited, since the CBD merchant processing is new
- Cutting-edge technology
- 24/7 payment processing anywhere and at anytime
- Analytics and reporting tools
- PCI DSS level 1
- Ecommerce gateway services
- Alternative payment options in more than 150 countries
- 24/7 security monitoring for fraud protection.
You don’t need to reside in the U.S. to work with this American CBD payment processor. iPayTotal provides its services to high-risk businesses around the globe. The award-winning online payment gateway is specifically designed for PSP/ISO and merchants and the payment platform utilizes state-of-the-art PCI DSS Level 1 Certified cloud software.
- Premium high-risk merchant services
- Long-term solution with high acceptance rate; 99% of accounts are approved
- Reduced risk of bank overexposure
- Account approval within 5-8 days
- Easy online access
- Reduce chargebacks by up to 72%.
- Minimum weekly sales of $1,500
- Must prove 4-6 months of CBD payment processing history with banking statement detailing sales, company name, refunds and chargebacks
- Compulsory 10% rolling reserve
- Multiple banking solutions, including online, mobile and telephone payments
- Available options for low-risk companies
- Customized packages
- 24/7 customer service support
Last but by no means least is this payment processor, which has one of the highest approval rates of all CBD merchant processing solutions.
PaymentCloud’s free virtual terminal enables business owners to track CBD sales with ease.
Boasting competitive chip, dip and swipe rates, PaymentCloud utilizes third-party processors and collaborates with banking institutions throughout the U.S. to ensure seamless, hassle-free transactions.
- Predictable flat-rate pricing
- Month-to-month billing for easy finance tracking
- Excellent customer service
- Extensive compatibility with third-party online shopping carts
- Online feedback is limited due to the fact the CBD payment processor is brand new
- Being new to the industry means that it’s hard to know what to expect in terms of service
- 24/7 live support
- Shopping cart integration
- eCheck & ACH processing
- POS systems
- Credit card integration
- Mobile payments
With the above information in mind, take the time to ask a CBD payment processor about any additional and/or customizable services that they can offer. Since every company’s approach is unique, it is crucial that you can depend on a CBD credit card processing platform for all of your payment needs.
Regardless of your business goals, choosing a CBD payment processor is not a decision to be taken lightly. Dealing with regulatory requirements, fraud protection and data security, handling chargeback management and guiding you in the right direction are just a few essential services to be on the lookout for.
This material does not constitute legal, professional or financial advice and BigCommerce disclaims any liability with respect to this material. Please consult your attorney or professional advisor on specific legal, professional or financial matters.
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