Selling CBD is legal, so why is it so difficult to get set up for credit card processing? The answer is because Visa and MasterCard do not want to process credit cards for CBD small businesses because there are a lot of chargebacks and they consider it very high risk.
So what are you to do if you are selling CBD? There are legitimate processors out there who underwrite CBD merchants with a very high rate of processing. They are approved by their processing bank to legitimately sell CBD accounts, but their costs of processing are much higher and therefore the rates to the merchants are in the 5% range.
Option 1: Lie or finagle your way with a regular run-of-the-mill credit card processing salesperson and claim on the application that you sell lotions, salves, herbs, vitamins or health products and hope you don’t get found out. This way you can get set up with normal rates for card processing. You can find credit card salespeople who are so hungry for a sale that they compromise their position with their processor, and will send in an application with “white lies” on it. You can get approved and start processing. However, it is only a matter of time before Visa and MasterCard figure it out and the processor shuts you down with no notice. Now you can only take cash and you are scrambling to find another solution.
There are even some salespeople who will tell you their processor is approved for CBD at the regular rates, when in fact the processor is absolutely not approved to sell CBD. And there are processors who are in it for the short run and tell their salespeople they are approved to sell CBD at the regular rates when in fact their business plan is to sign as many people up as they can and earn quick cash flow until the reality sets in and the merchants and the processor get shut down.
Again you are then in a position of risking getting shut down with no notice. You will lose a lot of business fast to customers who walk away because they don’t have enough cash in their pockets to purchase and you will be panicking to find a solution quickly.
Option 2: Get set up with a processor who is legitimately set up to write high risk accounts like CBD. The rates are in the 5% range, maybe a bit lower for instore brick and mortar locations or a bit higher for sales online.
The most popular Option 3 for brick and mortar business: Get set up with a cashless ATM machine. This procedure uses a regular credit card terminal and your customer uses it like an ATM machine. They enter their pin debit card and agree to the transaction plus a fee of generally $3. The merchant pays no fees to be able to accept debit cards. The consumer may or may not fuss a bit about the fee, but the convenience of not having to run to the bank and get cash is worth it. People generally do not carry much cash in their wallets these days, so this option gives your customers the ability to spend more than the cash in their pocket and gives you the ability to sell more product than the cash they have in their pocket.