November 9, 2020 | Merchants | Josh
If you have an online CBD store business, you have considered using Square CBD for your merchant processing. Many business owners immediately default to the major payment processors when searching for CBD payment solutions. It’s understandably common. However, they miss out on specialized CBD merchant accounts that offer more sustainable, long-term options from high risk credit card processors.
Obtaining a Square CBD merchant account can be tricky if you do not know the particular details of the industry. In some cases, your business may qualify for a standard account. But in many circumstances, the legalities and restrictions of selling oils and tinctures online can be an obstacle.
Luckily, there are several tools available to sellers in order to start, run, and grow an online CBD business. In this article, we will break down the ins and outs of the hemp and e-commerce space and compare that information to the Square CBD program.
Square CBD Payment Processing
On the surface, the Square CBD program for businesses seems to have competitive payment processing rates. They offer custom pricing packages for larger CBD businesses depending on the sales volume and average transaction size. Here is an easy breakdown of the rates Square offers for CBD processing.
|Payment Method||Square CBD Processing Rates|
|Online and In-App||4.2% + $0.30 per transaction|
|In-Person||3.9% + $0.10 per transaction|
|Keyed-In and Card on File||4.8% + $0.15 per transaction|
Accepting Payments For CBD Other Than Square
As you can see, these rates are significantly higher than the rates advertised for lower risk industries. This is because CBD, hemp, and cannabis-related products fall under the categorization of “high risk.” Acquiring banks have determined that certain industries are higher risk due to the chance of high chargebacks, regulations, or even reputational risk, to name a few.
As a result, high risk businesses such as online CBD shops have a more difficult time obtaining merchant accounts. Luckily, there are payment processors like PayKings that specialize in providing high risk merchant accounts for CBD businesses.
However, if you prefer to explore your options with Square, there is more to consider regarding long-term payment processing solutions.
Square CBD Features
If you want to accept payments with Square, CBD merchants should consider the features that the processor offers. They offer payment terminals for in-person or card-present transactions.
Payments solutions for selling CBD products have to meet certain regulations. The Farm Bill noted that THC content should be less than 0.3 percent in products. This is consistent with regulations specific to hemp-derived products in the industry. Measures such as these are in place to distance the CBD from its cannabis counterpart. However, as CBD payment processing progresses, online cannabis merchant accounts become more accessible.
Cannabis Merchant Solutions
Selling cannabis online may still be difficult in some states, however, acquiring cannabis merchant solutions in businesses that are considered tier 2 or tier 3 vendors is rather straightforward. These categories are subjective according to the bank that will be boarding your account, but for the most part, they have common qualities. For example tier 2 cannabis merchant accounts involve companies that supply a product to cannabis companies. This could be packaging, testing, or marketing services. In contrast tier 3 cannabis processing is easy to approve and involves products only tangentially related to the business. For example, a shirt company with a cannabis leaf would qualify for tier 3 cannabis credit card processing.
Square CBD Businesses
In conclusion, Square CBD opportunities constantly change with an ever-adapting industry. If you’re a business using Square payment processing to sell items related to CBD, hemp, or cannabis, your best bet is to find a merchant provider that specializes in these industries. Avoid getting your account shut down, and find a high risk merchant account provider. They’ll walk you through the application process and help you get approved for your CBD business fast.
November 9, 2020 | Merchants | Josh