cannabis payment processing

Cannabis Payment Processing: The Most Popular Companies US Dispensaries Use

Let’s explore the current landscape of cannabis payment processing in the US, including options the top 10 payment processing companies offer.

One of the most frustrating aspects of working in the cannabis industry is the lack of payment options. Although changing soon, cannabis’ remainder on the federal government’s list of Schedule I substances means that even though half of Americans live where cannabis is legal, they still can’t use credit cards as their payment method — a massive barrier encountered by no other industry. However, in the spirit of innovation, plant-touching companies still have options for cannabis payment processing.

Understand the Cannabis Payment Processing Landscape: No Credit Card Payments Allowed

Options for payment processing in the cannabis industry are limited because plant-touching businesses cannot accept credit cards.

This is because, while dispensaries are state-based, payment processing is not. Major credit card companies work on a national level and must adhere to federal regulations. Because cannabis is still nationally prohibited, this creates major risk for payment processors. Cannabis dispensaries cannot accept credit card payments because companies like VISA and AMEX cannot assume the “high risk” of being in the cannabis industry. Passage of the SAFE Act would change this, but the bill continues to stall out and dispensaries cannot accept credit cards in the meantime.

This makes cash king in the cannabis industry, which creates a set of risks for cannabis dispensaries. Working as a cash-only business and accepting large cash payments increases the risk of discrepancies in your books and theft at the point of sale.

Cash-only businesses also have a harder time upselling customers since cash on hand is limited. Many dispensaries have ATMs on-site for customers to overcome this and increase cash payments, but it can involve fees and it breaks up the customer experience. The ability to accept card payments is key. Flowhub, a cannabis payment processing system, found that customers spend an average of 30% more at dispensaries with at least one non-cash payment method.

Without credit card processing, there are a few other options cannabis retailers have, including point of banking (also called cashless ATMs) as well as ACH transfers and debit payments, although debit cards can be subject to the same scrutiny as credit cards. This makes cash, point of banking, and ACH transfers the preferred methods of payment for dispensaries since accepting credit card payments can get a business shut down.

These options all require the support of a cannabis payment processor, and there are many to choose from.

How to Determine the Best Solution for Marijuana Payment Processing

The inability of cannabis businesses to accept credit cards is a hindrance. But that doesn’t mean dispensaries and other cannabis businesses are out of luck: there are many cannabis payment processing companies out there. When shopping around for the right cannabis payment solution system, there are several factors to keep in mind.

  • Fees. Point of banking systems often charge fees, and these can vary by company and transaction size. A convenience fee is common, but you need to know: is the fee for the transaction applied to the customers or does it take a piece of your profits? If it comes out of your end of the transaction, does the company offer an annual rebate? Are there other hidden fees in your contract that affect your cannabis payments?
  • Integration. Is the payment processing system able to be integrated with your point of sale system? Integration of your payment system with your POS makes the checkout process move faster and removes the responsibility of the budtender to key in cards, transaction totals, and other numbers. Non-integrated systems increase the possibility of errors at checkout, which can throw your books off balance.
  • Security. What steps does the company take to protect your customer’s valuable financial information? Without credit card processing, cannabis payments can use private bank account information, putting customers at risk in the event of a hack. Cyber security must be a priority of payment processing systems to keep the trust of consumers.
  • Compliance. In the green rush of cannabis, some companies cut corners to inflate profits — make sure your marijuana payment processing company isn’t one of them. Common red flags are any companies claiming to be entirely cashless or offering credit card processors.

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