What are the Visa/MasterCard Rules Regarding Credit Card Payments for CBD Products?

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CBD High Risk Processing

If the THC in a product is less than .3%, credit card processing is allowed under federal rules and regulations.  Customers can purchase CBD in physical locations as well as online.  Merchants selling CBD are considered high-risk merchant accounts.  Applying for card processing with white lies about your products and trying to slide under the radar without divulging the high risk products will someday get you found out, and your merchant account will be suddenly canceled.  To avoid those headaches and losses of sales during a shutdown, follow a legitimate process with full disclosure to a high-risk processor.

The application with a high-risk processor takes longer and is more involved with lots more questions than an application for regular low-risk credit card processing. One reason is because the processor and underwriting bank must be prepared for high chargebacks.  It is irrelevant if this one particular merchant has low chargebacks, because the national average is high. The credit card processing rates will be a bit higher as well because of nationwide chargebacks, but the security of knowing you are following the regulations will save you money in the long run avoiding an interruption of sales with a shut down that could last a week or longer.  Online sales will be shut down completely, and in-store sales will be limited to cash in customer’s pockets.  Following the rules and regulations from the beginning will also save you a mountain of frustration scrambling to find another credit card processor.

Here is a summary of the transparent process of getting a proper CBD merchant account.

  • Certificates of Authentication (COA) are required, listing all the ingredients of your products and their percentage make-up in the product.
  • Traditional COAs must provide potency results, terpenes results, and sample results.
  • The merchant must grant the processor access to scan their POS system intermittently, and usually once a month, to ensure no unapproved products have been added to the merchant offerings.
  • With online CBD sales, the processor frequently scans the website for products not approved on the merchant application.
  • If a product has been added that has a higher THC level greater than .3%; the processor shuts down the merchant’s total processing until the added product is removed.

The second reason why the processing rates are higher for CBD products is that the processor has costs involved in scanning software and websites for compliance with their banks, which underwrite the processing and carry the liability.

We, at Electronic Money Company, are always honest and never lie on applications.  We work with a high-risk processor who wants to protect the merchant with security for their CBD product payments. Give us a call at 505-296-2847.