The CBD Industry’s Difficulty Obtaining Merchant Accounts
CBD product sales is a hugely successful and continually growing industry. In the United States alone, it earned approximately $5 billion in 2019 and sales are expected to increase to a whopping $24 billion by 2023, a major success story that can’t be denied. However, if your business sells CBD products such as creams, oils, capsules, pills and edibles, you may as well be selling marijuana. Although the two substances are quite different, credit card processors don’t see it that way. Unfortunately, they view the two as pretty much the same thing and although the laws for marijuana sales are indeed changing, it is still illegal to sell and use marijuana in much of the United States.
What’s The Difference?
There is actually a significant difference between CBD and marijuana. CBD, short for Cannabidiol, is a substance found in the cannabis plant that has been used medicinally, practically since the beginning of time. The key here being that although CBD has healing properties, it does not have the ability to make you high. Marijuana, on the other hand, contains large amounts of THC, tetrahydrocannabinol, a chemical and psychoactive compound that is responsible for the actual high you get from using the plant in any form.
Is CBD Legal?
According to the federal government, CBD is indeed legal and is regulated by the FDA. Although some individual states have put restrictions on their buyers, in most states, the purchase of CBD is most definitely legal and can be obtained in all of its various forms. The problem is, in the CBD world, legalities and regulations are constantly changing, which means, anything can happen. This factor lands the CBD industry in a “high risk” category for credit card processors; a high risk most are unwilling to take.
Another serious obstacle CBD businesses face in obtaining a merchant account, is the very large amount of chargebacks the CBD industry manages to receive. Whenever a product makes promises to customers, there will always be the possibility of dissatisfaction on the part of the consumer, especially when health and pain issues are involved. If a customer feels they’ve been let down by the CBD product, they can and often do contact their credit card companies directly and claim that they have been misled. Even if their claim is inaccurate, credit card companies will back the customer just about every time. This results in the original payment being pulled back from the CBD business and returned to the customer, thus resulting in a chargeback. In addition, sometimes product claims being made by CBD businesses may indeed be unsubstantiated, which has the same result; customer dissatisfaction leading to chargebacks. Too many chargebacks are deadly for a business trying to obtain a merchant account. Unfortunately, CBD businesses are heavily impacted by both of these types of chargebacks. Credit card processors generally run in the opposite direction when CBD businesses apply for a merchant account. They feel it’s just not worth their taking the risk.
What’s The Solution?
If you are an existing or start-up CBD business, struggling to obtain and keep a merchant account, there is a solution to your problem. You need the help of an experienced and successful “high risk” merchant processor with the know how and connections necessary to make things happen. First Card Payments is second to none when it comes to obtaining high risk merchant accounts for CBD businesses. We’ve done exactly that for other CBD businesses and we’ll do it again for you, at a very reasonable rate. And once you’ve obtained your merchant account we’ll do all we can to make sure you keep it. As long as your business exists, we’ll be close by to help in any way we can. That’s a promise we make to all of our clients and we always keep our promises. If you’re currently struggling to obtain a merchant account for your CBD business, looking for better rates, and looking to have backup accounts, cease your frustration and turn to us. We’ll have you accepting credit cards in no time!
Find us at: FirstCardPayments.com
Joyce Hope is a writer who specializes in merchant accounts. She has worked for First Card Payments since 2017.