CBD payment processing is not easy – you will need to opt for a high-risk merchant account, and your payment processor might be imposed for you by the platform you wish to sell your products on – especially if you wish to sell your products internationally. What other challenges will you face? How to tackle them? Learn this and more in this article!
The Regulatory Maze of CBD Payment Processing
CBD, derived from the hemp plant, exists in a regulatory gray area. While it’s legal at the federal level, state regulations vary widely, creating a complex web that businesses must navigate. Payment processors, wary of potential legal complications, often hesitate to onboard CBD merchants, leaving them in search of reliable and compliant solutions.
After all, in just a day or two, CBD products may get delegalized. This concerns both the whole industry and particular products made from certain CBD-derived substances. This poses a major challenge for sellers, who need to turn to specialized CBD payment processing services in order to be able to distribute their products.
High-Risk Label of CBD Payment Processing
Despite the growing acceptance of CBD, financial institutions still categorize the industry as high-risk. This label results in increased scrutiny, stringent underwriting processes, and higher fees for CBD merchants. The perception of risk can deter payment processors, making it crucial for businesses to actively seek providers specializing in high-risk industries.
Add to this the fact that certain online platforms require particular processors, and you get a situation where you can choose only from a handful of options. To add to that, most high-risk solutions are more expensive than their regular counterparts, meaning that your CBD payment processing will consume a higher percentage of your income.
However, this isn’t always a downside. High-risk payment processors offer better protection from fraud and chargebacks, something that you are more likely to experience working in the CBD industry. So, while it might cost you more, there are some benefits coming with the price.
Limited Payment Options
CBD businesses often encounter restrictions on payment options. Many traditional payment gateways shy away from the industry due to its perceived risk. As a result, merchants are left with limited choices, hindering the customer experience and potentially impacting sales.
To mitigate the impact of limited payment options, you need to explore and integrate alternative payment methods. E-wallets, cryptocurrency, and other emerging options can provide your customers with convenient and secure ways to complete transactions, fostering trust and encouraging repeat business.
The Takeaway
Whilst the abovementioned challenges might seem like major obstacles, overcoming them and choosing the right CBD payment processing method will help you navigate this rich market which still has a lot of potential that you can capitalize on. Thus, you should perceive them as opportunities – with each challenge, the prize gets higher, so they shouldn’t discourage you from selling your CBD products.