How Can Payment Processing Impact CBD Merchants?

Traditional payment processors can have a significant impact on CBD merchants. Processors like PayPal, Stripe, and Square are big names in the processing industry that offer traditional services. These services are fine for low risk industries. However, when a business becomes more complex, a CBD processor becomes the best solution. 

PayPal CBD and Policy Violations

Oftentimes, CBD merchants don’t know this when establishing payment processing. When CBD merchants use traditional processing, they put their entire business at risk. Traditional processors typically ban the sale of CBD. Violating this policy can result in a merchant’s account being frozen. Merchants are left without access to their business and any funds in their merchant account. This is an urgent problem for a merchant to face.

Keep your CBD merchant account protected and know the policies of traditional payment processors.

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Selling CBD classifies a merchant as a high risk. This is due to the advanced regulation and specialization that high risk industries require. CBD merchants operate in an industry where regulation is continuously changing. Since the sale of CBD was legalized in 2018, a lot of factors continue to evolve. Due to this, the sale of CBD becomes a higher risk than the average product on the market. Only a high risk payment processor can safely and effectively process payments for high risk merchants.  

PayPal’s CBD Policies

This process could take weeks due to the size of PayPal’s platform. Since PayPal does not allow high risk industries to use their platform, CBD merchants are out of luck. On PayPal’s policy page, it states that products containing Cannabidiol may not be sold using the platform. PayPal does not accept or facilitate any CBD payments. This is because the regulation on the sale of CBD products is constantly changing. So, PayPal does not want to worry about being in regulatory compliance by banning this sale. The same can be said for other high risk industries. PayPal’s policy states that any business deemed as high risk will not be supported on their platform.

Stripe’s CBD Policies

The Stripe CBD policy has similar restrictions to other traditional payment processors. Their popularity in traditional processing often confuses high risk merchants. Many high risk merchants don’t even think twice when signing up for Stripe’s platform. But unfortunately, a merchant’s high risk business will likely be shut down once discovered on Stripe. Stripe’s policies state that high risk industries are restricted from using any aspect of the platform. Among those explicitly stated is any Cannabidiol product. Stripe’s CBD policy is zero tolerance. This means if a merchant is discovered selling CBD, they’re account could be frozen. Now, it is up to the merchant to establish a high risk merchant account to regain their business and funds. Once this is done, Stripe can release funds and deactivate your account. 

Stripe uses machine learning through Radar that can evaluate each payment’s risk in real-time. Radar is a helpful tool for merchants and can even protect them from fraud. While on the other hand, it means that merchants using Stripe are continually being evaluated for risk. High purchase volumes or an increase in chargebacks can make merchants appear to be high risk to Stripe. Radar can automatically flag your merchant account for Stripe to review. This may come along with your account being temporarily frozen. However, if you are a high risk merchant, you know that your industry comes with abnormally high chargeback volumes. Stripe does not have expertise in high risk, nor do they want to. So, this is why high risk merchants cannot look to Stripe for long-term processing solutions.

Square’s CBD Policies

Recently, the Square CBD policy has changed. They launched an early-access CBD program for high risk merchants. The program is a limited access trial that allows merchants to sell CBD on Square’s platform. When CBD sales were legalized in 2018, Square felt that there platform needed to be opened up to this new market. So, Square processing has been made available for all types of CBD transactions. There is a CBD processing solution for in-person, online, in-app, and virtual terminal sales. Square CBD processing offers a clear price breakdown for each solution on their website. 

Square is one of the first traditional platforms to delve into CBD processing. However, merchants must undergo intensive screening to make the cut. Square makes sure all products sold on their platform are under the THC threshold. Additionally, the Square early-access program is only a trial for the payment processing company.

High risk merchants seeking solutions through Square’s traditional payment processing platform are out of luck. The platform does not support high risk industries due to the specification and expertise needed. Without knowing this policy term, high risk merchants can get caught in a violation of terms. This results in the merchant account and funds freezing until a high risk account is established elsewhere. A full list of policy terms, prohibited goods, and restricted sales can be found on Square’s website.