Finding the Best CBD Payment Processors: Capitalize on the Profit Potential of Hemp-Derived Products (2022) If you’re looking for a way to sell your CBD products online, chances are you already Looking for CBD credit card processing? Here’s what you need to get CBD merchant processing, plus the 6 best picks for online & retail shops.
Finding the Best CBD Payment Processors: Capitalize on the Profit Potential of Hemp-Derived Products (2022)
If you’re looking for a way to sell your CBD products online, chances are you already know a lot about cannabidiol and the popularity it is gaining in the world of health and wellness.
An influx of online businesses are introducing CBD into their ecommerce stores. As an industry poised to harvest $16 billion in revenue by 2025, is it any wonder why?
Since the passing of the 2018 Farm Bill, which was signed into effect by President Donald Trump in December 2018 and removed hemp from the definition of marijuana under the Controlled Substances Act (CSA), an increasing number of ecommerce business owners are searching for payment gateways that allow CBD merchant processing.
In an effort to meet consumer demand for CBD products, such as oils, capsules, supplements and topical solutions, the non-psychoactive cannabinoid is being stocked inside an ever-growing number of brick-and-mortar shops and online ecommerce stores.
With the CBD therapeutics segment alone on-track to earn $9.30 billion in 2026, growing at a CAGR of 27.4%, there’s a lot of money to be made in this industry. However, getting involved in such a high-risk sector means that you’ll need to make yourself aware of what is required to conduct CBD business transactions legally.
What is CBD?
It might be almost 80 years since CBD was first discovered, but there’s still a lot to learn about this unique chemical compound.
Back in 1940, Dr. Roger Adams and a group of scientists from the University of Illinois successfully identified the non-psychoactive cannabinoid for the very first time. Some 23 years later, scientists managed to assess its structure in clarity.
Ultimately, this kick-started plenty of research into a molecule that has since been hailed as a medical marvel ingredient.
CBD occurs naturally in marijuana and hemp plants, but the vast majority of products filtering into the mainstream market are created using industrial hemp plants.
Although CBD boasts a fairly long history, it has never been discussed quite as much as it is nowadays.
In fact, CBD was exposed 20 years before the cannabis plant’s primary psychoactive cannabinoid THC was. Thanks to innovations in technology, scientists have been able to dig a little deeper into CBD’s therapeutic potential as of late, which has led to it overtaking cannabis’ high-inducing chemical THC in terms of what’s being talked about and researched.
This is not to say that THC does not possess therapeutic qualities — but for now, the world is paying close attention to CBD, since users need not experience mind-altering effects to reap the rewards.
Notwithstanding, unproven health claims are prohibited by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) due to the risk of merchants making false claims and promises to consumers that could deter them from seeking professional medical care, merchants are limited to using a high-risk CBD payment processor.
Is CBD Legal?
CBD’s high risk, combined with the fact that marijuana remains illegal at the federal level, makes the task of accepting online payments fairly restrictive for sellers.
“Marijuana-derived” CBD is not legal at the governmental level. “Marijuana” or “cannabis” as it is more commonly known is a part of the cannabis family, just like hemp. The difference is that cannabis grows with more than 0.3% THC; the plant’s psychoactive element.
Confusion between the two plants has caused controversy among hemp business owners who have struggled to find processing solutions that are willing to accept online ecommerce payments for CBD-containing products.
Even if your ecommerce business specializes in the sale of hemp-derived CBD, you will still need to seek out a reputable CBD payment processor that is equipped to handle high-risk transactions.
As an industry that is undergoing constant metamorphosis in the legal aspect, you would benefit from staying on top of the evolving legal cannabis landscape across the U.S. For an up-to-date status by state, get in the habit of checking reputable online resources like this one.
CBD Requires High-Risk Processors
Albeit legal in most forms throughout much of the U.S., CBD is a high-risk industry. The FDA is still straightening out the regulatory framework for this industry, with the majority of regulations still unclear.
Not to worry — because so long as you are prepared, you can dodge potential financial predicaments and find success with your online/offline CBD store.
On the other hand, you simply cannot ignore the fact that CBD’s strict regulation puts all products containing the cannabinoid in a high-risk category. As a result, many payment processors will be reluctant to work with CBD companies.
Shady manufacturers looking to make a quick buck are ruining it for everybody else by deterring payment processors from working with CBD sellers for online transactions.
The solution? Finding a high-risk processor who is not afraid to assist you with a payment gateway that ensures you can conduct business just like any low-risk company is able to.
BigCommerce knows how to handle high-risk businesses, such as those associated with the CBD industry. We indulge business owners with more than 65 payment gateways that can be utilized to conduct transactions in over 100 countries. BigCommerce also invites high-risk companies to facilitate business transactions with more than 250 local payment methods.
Although the payment gateways made available to your business will depend on the country in which your company is registered and also, the currency that you use. However, whatever the gateway, we ensure that it can be digitally integrated with a range of popular payment technologies like Apple Pay, Amazon Pay and PayPal, to name a few. We talk now about this below.
What to Look for in a CBD Payment Processing Gateway
In 2018, investment firm Cowen investment claimed that retail sales of CBD consumer products in the U.S. ranged from $600 million-$2 billion.
Brightfield Group anticipates global CBD sales will grow to approximately $22 billion by 2022.
Such extortionate predictions mean that an increasing number of ecommerce businesses are scrambling to find a CBD payment processor willing to accept them.
Here’s what you need to look for prior to opening a CBD merchant account:
1. High-risk availability.
It is imperative that your CBD payment processor is able to deal with high-risk transactions.
The reason for this is because the fairly new industry is prone to payment card fraud and charge-backs. As an industry that hovers around a legal grey area, only a handful of CBD payment processing services will be willing to take the risks associated with this type of transaction.
Be on the lookout for a company that boasts extensive experience in aiding businesses operating within a high-risk sector.
Some other high-risk industries that will demand gateway payment systems include:
- Adult products and services,
- online dating,
- online gaming,
- Bitcoin trading,
- travel services,
- vaporizer and e-cigarette companies.
2. Easy integrations.
Nobody wants to hear that they are being forced to switch their ecommerce site to a brand new platform in order to integrate a CBD payment processor.
This can be incredibly time-consuming and also, very deflating; particularly if you’ve invested a lot of money and effort into perfecting the way your online cannabis or hemp shop looks to your customers.
With that being said, it is best to refrain from using a CBD merchant processing system that requires you to use their existing platform. Instead, opt for a company that enables you to integrate their CBD credit card processing system seamlessly with a broad scope of ecommerce software.
Companies that can offer these services will be the ones to do business with, since they will be capable of supporting you as your company thrives.
A significant portion of CBD payment processors will operate using API integration, which is the most common payment gateway of them all. A major benefit of using API is that a payment gateway of this kind can be monitored by you, the business owner, as well as provide you with an insight into how the ecommerce store looks from a customer’s perspective.
3. POS availability.
Save yourself time on administrative duties and cut the cost of in-office work by finding a CBD payment processor with point-of-sale (POS) availability.
Processors with POS system integration will be able to assist you in managing both online and offline transactions. With accurate reporting gleaned from POS software, store profitability can be increased, as well as customer loyalty, business intelligence and ease of access to your sales portal.
POS software will also aid you in making lucrative business choices. What’s more, this type of software can be used to control stock input and output from a single location.
4. Low fees.
As the old saying goes, “You have to spend money to make money,” but just how true is this quote?
When it comes to finding a reliable CBD payment processor, you will not be limited to companies that charge a hefty upfront fee. Although the more well-established companies may require a fee from account holders upon registration, many will provide their services free of charge or for an affordable rate.
Ask yourself if you can afford to pay the specific percentage that your preferred payment gateway will deduct from you for each transaction. If it does not work well with your profit margins, search for a service provider elsewhere.
Keep in mind that credit transactions may be more expensive than debit card transactions.
There are also a number of other fees to take into consideration when selecting a CBD payment processor, such as:
- Statement fees,
- Compliance fees,
- Non-compliance fees,
- Terminal fees,
- Monthly/annual fees
Chargebacks may also accrue additional fees, so it would be in your best interest to confirm this prior to establishing a partnership with CBD merchant processing companies.
5. Reasonable contracts.
Not every payment processor will require you to sign a contract that is binding in order to do business. Each company’s fees and contracts will differ, so allow yourself enough time to ponder over which one suits your CBD company the best.
It is advisable to stay away from companies that will only establish long-term partnerships, particularly if they do not have sufficient testimonials to back-up their claims.
In the event that a company catches your eye, but will only offer a partnership under the condition that you fork over an ETF (early termination fee) if you choose to go elsewhere, prepare to negotiate.
6. Customer support.
You simply must be prepared for the worst case scenario when it comes to dealing with online and offline transactions for CBD-related products.
For example, if a customer wants to issue a $200 chargeback on a recently submitted order, you need to understand exactly how these types of situations will be handled by your chosen CBD payment processor’s customer service team. After all, the level of service they provide will reflect on you as a business.
Before you choose a payment gateway, ask a member of the team how they go about handling disputes, as well as how fraud protection will minimize the chances of disputes arising in the first place.
Personalized customer service is the way to go, but if you cannot find a company that offers this, at least find one that hires a customer service team to manage calls and emails around the clock.
Start seeing green in your CBD ecommerce business.
Learn how you can navigate some of the unique challenges faced by CBD merchants and grow your business in our Complete Guide to CBD Ecommerce.
8 of the Best CBD Payment Processors
Competition is stiff in the CBD industry, so you need to be at the top of your game if you want to maximize profit potential and customer retention rates.
A CBD payment processor can provide the perfect tailored solution for your business, while eliminating the hassles associated with administrative tasks, accounting and business upkeep.
The following top-rated companies have branched out into the CBD industry with their payment gateway services:
This leading payment gateway service provider is PCI-certified. Since the company’s inception in 1998, USAePay has been providing businesses in every niche with ecommerce, retail and telephone/mail order solutions.
- Integratable with the BigCommerce platform
- Custom features and tailor-made solutions
- Optimized user experience
- Good customer support
- Newly designed virtual terminal
- Hardware is slightly outdated, but still efficient
- Vertical market
- Merchant console
- Event ticketing
- Report customization
- Fraud module setup
Presenting clients with a unified commerce strategy, this CBD payment professor supports various payment methods including ACH, credit cards and debit cards. NMI provides detailed insights into transactions, of which can be managed in conjunction with BigCommerce.
- Integratable with the BigCommerce platform
- Offers global payment options
- Supports ACH, credit cards and debit card
- Fast payment turnaround
- Multiple MID capabilities
- Monthly fee of $10 required
- $0.05 fee per transaction
- Virtual terminal
- Free shopping cart
- Recurring billing feature
- Report generation
- Merchant control panel
- QuickClick shopping cart
Next on the list is this high-risk payment processor, which is acknowledged as the most well-respected service provider specializing in the CBD industry.
- Seamless integration with most platforms
- Affordable rates as low as 2.49%
- Fast approval and pre-approval within six hours
- Direct network of over 20 banks and PSP’s
- Can be tricky to handle multiple tasks at once using the fairly complex interface
- Mobile solutions
- Offshore merchant accounts
- Online credit card payment processing
- Mail order
- Telephone order
- Cross-border transactions
- Level 2 and 3 credit card processing
- Recurring billing
- Virtual terminal
- Fraud prevention
While this CBD payment processor might only offer a minimum of $50,000 of monthly processing for offshore accounts, the payment gateway service is ideal for startup businesses looking to get their feet off the ground.
- Capable of processing high ticket volumes
- Offshore merchant accounts
- Reasonable pricing
- Fair contract terms
- Top-notch customer service
- Requires minimum $50,000 monthly processing volume for offshore accounts
- Lacks information regarding POS systems and CBD credit card processing
- Currently, no mobile processing system exists
- International and offshore banking; 15 banking relationships
- Chargeback prevention software
- ACH & virtual check services
- Fraud monitoring software
Easy Pay Direct.
Perhaps the most well-established CBD payment processor on the list so far is this one, which launched back in the year 2000.
Easy Pay Direct utilizes an EPD Gateway that serves not only high-risk companies in the CBD, cannabis and hemp industries but also, low-risk companies in all sectors.
Easy Pay Direct links account holders with credit card processors or domestic banks, depending on their requirements.
- No early termination fee
- Load-balancing feature allows account holders to process higher monthly payments
- High-quality proprietary payment gateway
- Zero complaints on their website
- Setup fee of $99 is required to create an account
- $29.99 monthly account fee required
- Premium fee is required to fund account fees and processing rates; flat fee 3.95% + $0.25 per transaction
- Account holders are tied to a three-year contract with automatic renewal clause at one-year intervals
- Poor level of customer support, based on the reviews
- Retail swipe software
- PCI compliant
- Online shopping carts for simple transactions
- Direct mobile payments
- No early termination fee
- 24-hour customer service support options.
Although a small provider, PayWize knows what’s up in regards to the financial predicaments faced by businesses operating in the CBD industry.
The company, which is affiliated with Payment Depot, might have only started in 2017, but they have already provided CBD merchant processing to a long list of CBD oil merchants and medical cannabis dispensaries throughout the U.S.
- Guarantees flat-rate pricing for CBD payment processing
- Compatible with various ecommerce platforms and websites
- Month-to-month billing option
- Broad compatibility with third-party shopping carts
- Merchant feedback is currently limited, since the CBD merchant processing is new
- Cutting-edge technology
- 24/7 payment processing anywhere and at anytime
- Analytics and reporting tools
- PCI DSS level 1
- Ecommerce gateway services
- Alternative payment options in more than 150 countries
- 24/7 security monitoring for fraud protection.
You don’t need to reside in the U.S. to work with this American CBD payment processor. iPayTotal provides its services to high-risk businesses around the globe. The award-winning online payment gateway is specifically designed for PSP/ISO and merchants and the payment platform utilizes state-of-the-art PCI DSS Level 1 Certified cloud software.
- Premium high-risk merchant services
- Long-term solution with high acceptance rate; 99% of accounts are approved
- Reduced risk of bank overexposure
- Account approval within 5-8 days
- Easy online access
- Reduce chargebacks by up to 72%
- Minimum weekly sales of $1,500
- Must prove 4-6 months of CBD payment processing history with banking statement detailing sales, company name, refunds and chargebacks
- Compulsory 10% rolling reserve
- Multiple banking solutions, including online, mobile and telephone payments
- Available options for low-risk companies
- Customized packages
- 24/7 customer service support
Last but by no means least is this payment processor, which has one of the highest approval rates of all CBD merchant processing solutions.
PaymentCloud’s free virtual terminal enables business owners to track CBD sales with ease.
Boasting competitive chip, dip and swipe rates, PaymentCloud utilizes third-party processors and collaborates with banking institutions throughout the U.S. to ensure seamless, hassle-free transactions.
- Predictable flat-rate pricing
- Month-to-month billing for easy finance tracking
- Excellent customer service
- Extensive compatibility with third-party online shopping carts
- Online feedback is limited due to the fact the CBD payment processor is brand new
- Being new to the industry means that it’s hard to know what to expect in terms of service
- 24/7 live support
- Shopping cart integration
- eCheck & ACH processing
- POS systems
- Credit card integration
- Mobile payments
With the above information in mind, take the time to ask a CBD payment processor about any additional and/or customizable services that they can offer. Since every company’s approach is unique, it is crucial that you can depend on a CBD credit card processing platform for all of your payment needs.
Regardless of your business goals, choosing a CBD payment processor is not a decision to be taken lightly. Dealing with regulatory requirements, fraud protection and data security, handling chargeback management and guiding you in the right direction are just a few essential services to be on the lookout for.
This material does not constitute legal, professional or financial advice and BigCommerce disclaims any liability with respect to this material. Please consult your attorney or professional advisor on specific legal, professional or financial matters.
Looking For A CBD Merchant Account? Here Are The 6 Best CBD-Friendly Payment Processors To Work With
CBD merchant accounts inevitably come with higher prices and more restrictive policies than low-risk accounts but good options include PaymentCloud, PayKings, and more.
Expert Analyst & Reviewer
Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
Products derived from CBD oils have been available for several years now, but the legalization of hemp by the 2018 Farm Bill really kicked the market for CBD products into overdrive. Unfortunately, the payment processing industry hasn’t been very welcoming of this new class of products, leading to significant challenges for CBD merchants in finding a merchant account that will allow them to process credit and debit card sales.
Cannabidiol (or CBD) is a substance (or phytocannabinoid, to be more precise) that’s derived from hemp (Cannabis sativa) plants. Now, you’re probably already aware that marijuana also derives from Cannabis plants. The major difference between CBD products and marijuana is that the former contain little or no THC (tetrahydrocannabinol) or any of the other psychoactive ingredients that marijuana contains. In other words, CBD products won’t get you “high.” Despite this rather obvious distinction, CBD-based products had been illegal under federal law until just a few years ago. While that’s no longer the case, CBD laws today vary widely from one state to the next.
Almost all states currently allow you to purchase or distribute hemp-derived CBD products that contain less than 0.3% THC, but each state imposes specific legal requirements for doing so.
Although medical marijuana and, by extension, CBD products are now legal in the majority of US states, most banks and credit card processors have been extremely reluctant to approve CBD businesses for merchant accounts, and many such companies have had their accounts suddenly closed without notice. In this article, we’ll update you on the current (as of September 2021) legal status of CBD products and recommend several merchant account providers that accept businesses selling them.
Learn More About Our Top Picks
Read more below to learn why we chose these options.
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What Is A CBD Merchant Account?
A CBD merchant account is a merchant account that has been specifically approved for use in selling some or all types of CBD products. CBD businesses are considered very high-risk, so most of the popular merchant account providers (and even many high-risk specialists) will not accept merchants selling these products.
Why Do You Need A High-Risk Merchant Account For CBD Sales?
As you might expect, the processing industry has placed CBD products firmly in the high-risk category, making it much more difficult and expensive to get a merchant account. Businesses can find themselves labeled as high-risk for any number of reasons, but for CBD products, the main reasons are (1) unsubstantiated claims regarding the efficacy of the products, (2) high chargeback rates, and (3) legal issues affecting distribution of the product.
Like many products in the nutraceutical category, the purported beneficial effects of CBD oils have not been approved or validated by the Food & Drug Administration (FDA). With little or no peer-reviewed research currently available to evaluate the benefits of CBD use, the flood gates have been opened for businesses to tout CBD as a potential cure for… well, just about anything. Initially offered as a way to help you relax and alleviate stress, CBD is now claimed (by some people, at least) to cure depression, anxiety, and even autism.
Chargebacks are a known risk for just about any type of business, but the chance of experiencing one is much higher with CBD products. Unfortunately, the unproven claims of CBD’s beneficial health effects that we’ve discussed above make it much more likely that consumers will file a chargeback if they feel that the CBD-based product they purchased didn’t help them or make them feel better at all.
The banks that underwrite merchant accounts also don’t like to deal with businesses that sell a product that is on shaky or unclear legal ground. Currently, CBD laws vary widely from state to state, creating a number of legal conundrums for merchants who sell them.
The 6 Best CBD Merchant Services Providers
A CBD merchant account is simply a merchant account that allows you to accept credit card payments but has been approved by your provider for selling CBD-derived products. Due to the inherently higher risk associated with CBD products, CBD merchant accounts inevitably come with higher prices and more restrictive policies than low-risk accounts.
Here’s a brief overview of six of the best merchant account providers in the industry that accept CBD merchants:
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- No application or account setup fees
- “Free” credit card terminal with each retail account
- Dedicated account manager for customer support
- No pricing disclosures on website
California-based PaymentCloud has been providing high-risk merchant accounts since 2010 and now accepts CBD businesses as well. The company has a very high success rate at getting merchants approved for an account, and – unlike most high-risk providers – doesn’t charge an application or account setup fee.
Like most high-risk specialists, the company utilizes a quote-based pricing system and doesn’t disclose any standardized processing rates or account fees. Retail merchants are eligible for a “free” EMV-compliant terminal with each account. In this case, “free” means you’re free to use it for as long as you maintain your account, not that you can keep it even if you later close your account or switch providers.
PaymentCloud also offers Authorize.Net as its payment gateway, although its system is compatible with other third-party gateways as well. Additionally, it provides a free virtual terminal with each account. Note that PaymentCloud is currently only approving accounts for CBD merchants that sell products that are applied externally, such as oils and lotions. Ingestible CBD products, such as gummies, dog treats, etc., are currently prohibited.
2. National Processing
Get a free Clover Go card reader from National Processing when you sign up. Claim your card reader.
- Full line of Clover terminals and POS systems
- Excellent online reputation
- Low-cost echeck/ACH payment processing
- “Free” equipment may require a long-term contract
- Early termination fee charged for “free” equipment
National Processing is mainly known for its excellent low-risk payment processing services, which feature competitive rates and transparent terms. So you may be surprised to hear that National Processing also offers high-risk merchant accounts to CBD vendors.
High-risk merchants will have access to most of the same features National Processing offers to lower-risk merchants, including terminals, mobile payment processing, eCommerce support, and chargeback prevention tools. Be prepared to pay higher transaction fees than those listed on the company’s website, however. High-risk merchants also pay a $15 monthly account fee.
National Processing may be of particular interest to CBD merchants who want to use the Clover line of terminals. National Processing supports the full line of terminals and add-ons.
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- Predictable flat-rate pricing
- No monthly fees
- Very affordable processing hardware
- Suitable for low-volume CBD businesses
- Account stability issues
- Below-average customer support
Square has been offering CBD processing services since 2019. Transaction processing rates are notably higher than the company’s low-risk rates, but the lack of account fees makes it a great alternative to getting a traditional high-risk merchant account. Although it’s still listed as an “early access” program on the Square website, you no longer need an invitation to sign up.
As with Square’s extremely popular services for low-risk businesses, the company fully discloses all prices on its website. This transparency allows you to make a reasonably accurate estimate of what it will cost you on a monthly basis to use its services. Processing rates are quite reasonable, although they’re naturally higher than what low-risk merchants are charged:
- 3.9% + $0.10 per transaction for in-person (i.e., card-present) transactions
- 4.2% + $0.30 per transaction for online and in-app transactions
- 4.8% + $0.15 per transaction for keyed-in and card-on-file transactions
Believe it or not, these are actually very good rates for any high-risk business, but especially for an industry like CBD. One word of caution: Square charges the same rate for credit and debit cards, which means that you’ll be paying a much higher rate for PIN debit transactions than you would under an interchange-plus rate plan. At low volumes, this is a reasonable tradeoff to avoid all of the numerous monthly and annual fees that come with a traditional merchant account.
Now that Square is an option for low-volume CBD merchants, we feel that this is a great opportunity for businesses that up until now have had to operate on a cash-only basis. You’ll have access to all of the same great products, services, and contract terms that low-risk merchants have been enjoying for years. Square operates on a pay-as-you-go basis, eliminating virtually all of the onerous “hidden” fees that most other providers add to your bill. At the same time, you need to be aware that Square does have its limitations. As a payment service provider (PSP), Square aggregates your payment account with those of other merchants, rather than providing you with a true full-service merchant account. Because of this limitation, the risk that your account will suddenly suffer a freeze, hold, or termination is higher than it is with a traditional merchant account. Also, Square’s reputation for customer service and support isn’t that great, although it has improved significantly in this area within the past few years.
4. Easy Pay Direct
Easy Pay Direct
- Accepts CBD merchants selling ingestible and topical products
- No monthly minimum
- No early termination fee
- Possible $250 application fee
Easy Pay Direct has been providing high-risk merchant accounts for over nine years. It now accepts CBD merchants, although it doesn’t take startups unless they’re either very well-funded or have previous operating experience. The company’s primary product is its proprietary EPD Gateway. While you’ll have to pay a premium in terms of processing rates and account fees, you’ll be set up with a domestic bank or credit card processor. It’s also one of the very few CBD providers to offer some pricing disclosures on its website. US and Canadian merchants who qualify can get approved for an account in about 7-14 days.
The company’s processing rates start at 2.50% + $0.25 per transaction, although these are volume-based rates, meaning that only the largest businesses will qualify. There’s also an account fee of $29.99 per month. One very positive feature of Easy Pay Direct’s contracts is that they do not have an early termination fee, even for high-risk businesses. While this isn’t quite the same thing as true month-to-month billing, it does make it much easier to close your account without penalty if you have to. Also, there’s no monthly minimum.
One helpful feature offered by Easy Pay Direct is called load balancing, where a business can divide its incoming funds among multiple merchant accounts. It’s particularly beneficial for high-risk businesses that often exceed the monthly processing volume limits imposed by the processor underwriting their accounts. Just be aware that you’ll usually have to pay separate monthly fees for each account, so it might not be cost-effective for some merchants. Also, be aware that you might not need this feature if you opt for an offshore account. Underwriting guidelines in some (but by no means all) foreign countries are more relaxed than they are in the United States, and you might not have a monthly processing limit imposed on your account at all.
- No setup or application fees
- Multicurrency options
- eCheck processing offered
- Interchange-plus pricing offered
- Early termination fee
- May require rolling reserve
PayKings specifically advertises to CBD merchants, particularly those who’ve had their accounts with more traditional providers shut down. The company works with over two dozen backend processors (including several offshore banks) to get you approved for an account. Best of all, it takes care of the application and underwriting process without charging you any application or account setup fees.
PayKings also offers interchange-plus pricing, but it’s not cheap. Rates are advertised as being interchange + 1.0% and higher. While this is quite a bit more than rates typically offered to low-risk businesses, it’s still a better deal than getting stuck with the even higher costs of a tiered pricing plan. Fortunately, PayKings provides a very broad array of products and services, including numerous third-party integrations. The company enjoys a mostly positive reputation among merchants, although problems with early termination fees and rolling reserves have come up. These two requirements are actually imposed by the backend processor, not PayKings, and are difficult to avoid for any high-risk merchant.
6. SMB Global
- Accepts CBD businesses through offshore merchant accounts
- Reasonable pricing and contract terms
- Excellent customer service
- Requires a minimum $50,000 monthly processing volume for offshore accounts
- No mobile processing system at this time
- No information available about credit card terminals or POS systems
SMB Global is a high-risk specialist that spun off from one of our favorite providers, Payline Data, in 2016. Headquartered in South Jordan, Utah, the company specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of back-end processors, it’s able to approve a merchant account for almost any high-risk business, including those selling CBD oils. The company primarily serves eCommerce merchants, offering a choice between the NMI and Authorize.Net payment gateways, as well as integrating with over 175 popular online shopping carts.
Because it works with so many banks and processors to get you approved for an account, the company doesn’t offer any specific pricing information. Processing rates, account fees, and contract terms vary widely depending on which back-end processor is handling your account. While we highly recommend that you request an interchange-plus pricing plan, be prepared to have to accept a tiered plan instead, particularly if you haven’t been in business for very long. Likewise, you can also expect to have a standard three-year contract with an automatic renewal clause and an early termination fee. As a CBD merchant, you should be prepared to have a rolling reserve included in your account agreement.
SMB Global requires a minimum processing volume of $50,000 per month for an offshore merchant account, which can present a formidable barrier to a newly established CBD business. The company will occasionally waive this requirement if your business has a very strong financial history. Offshore accounts support multicurrency processing, allowing you to avoid cross-border fees. It also features dynamic currency conversion, letting your customers pay in either their local currency or the currency in which you bill them. SMB Global appears to accept CBD merchants only through offshore accounts at this time.
Looking For One Of These CBD Merchant Processors?
As CBD products become more mainstream, the number of merchant services providers offering CBD processing is steadily increasing. Unfortunately, many of these providers either don’t have much of a public track record, or we simply haven’t yet subjected them to a full review. In either case, while they might be a great choice for your business, we can’t include them in a “best of” list at this time. The following providers are worth looking into if you’re struggling to get approved for an account:
BestMerchantRates (formerly PayWize) is a very small provider that has only been in business since 2017. However, it’s affiliated with Payment Depot, one of our top choices for low-risk businesses. The company’s one-page website discloses some details about its CBD processing service, but doesn’t mention specific prices. You can expect credit/debit card processing, eCheck acceptance, flat-rate pricing, and no rolling reserve. While the company appears promising, the lack of online feedback from users makes it impossible for us to confirm that merchants are happy with their service. BestMerchantRates is still worth checking out, particularly if none of our top five recommendations have worked out for you.
Shift Processing is a high-risk specialist that markets its services to both retail and eCommerce CBD merchants. The company provides much more information about its services on its website than many other providers we’ve seen, but doesn’t include specific pricing information. Shift Processing uses surcharging programs to help you pass some of your processing costs onto your customers and make it more affordable for you to accept credit cards. Online feedback for the company is generally positive, but we haven’t completed a full review of Shift Processing at this time.
Legal Issues In The CBD Oil Industry
Until late 2018, CBD-based products were still listed as Schedule I drugs by the Drug Enforcement Agency (DEA), effectively prohibiting their sale, transportation, or use under federal law. However, many states (36 as of this writing) have passed medical marijuana laws that legalized the use of marijuana and CBD-based products for medicinal purposes. Eighteen states have gone even further, legalizing marijuana for recreational purposes and removing most prohibitions against CBD-based products.
The 2018 Farm Bill was supposed to change all of that. Under this law, hemp-based products (defined as containing less than 0.3% THC) were removed from the Schedule I list of controlled substances. However, you must be a licensed grower and comply with all applicable federal and state laws to produce and sell your product legally. With so many variations in state laws, it’s well beyond the scope of this article to attempt to cover them all. We recommend that you look into your state’s laws and consult with an attorney or qualified consultant to determine the specific requirements that apply to your business.
Passage of the 2018 Farm Bill was supposed to open the floodgates for the CBD industry, making it much easier for CBD merchants to obtain merchant accounts and accept credit cards just like any other business. For a time, it seemed that this would actually happen. Elavon began accepting CBD merchant accounts but suddenly shut them down just a few months later due to quality control issues with the product. If merchants don’t take adequate steps to ensure that their products contain less than 0.3% THC (as happened here), they could easily put themselves in legal jeopardy for selling a controlled substance.
Another factor behind Elavon’s decision to pull out of the CBD business was that the regulatory framework simply wasn’t in place yet to properly handle these types of businesses without taking on unacceptable risks.
For example, the Food and Drug Administration (FDA) still considers ingestible CBD products (e.g., gummies, dog treats, etc.) to be illegal because it has already approved the drug Epidiolex, which derives from CBD, for use in treating certain forms of epilepsy. The FDA has not approved the use of CBD-based products for any other purpose at this time. Research that might confirm the touted health benefits of CBD (and, presumably, lead to FDA approval) is still in its infancy, so don’t expect this situation to change anytime soon. It’s for this reason that some of the merchant account providers we’ve profiled above are only willing to take on merchants who limit themselves to selling CBD products that are applied externally (e.g., oils, salves, etc.).
Today, only a few high-risk specialists accept CBD businesses, and in many cases, they’ll require you to obtain an offshore merchant account. Of the few providers that do take CBD merchants, there are an even smaller number that we feel comfortable recommending. Our recommended processors are ones that we know already accept CBD merchants and have a strong reputation for providing fair prices and honest service.
You can, however, still expect to be assigned a high-risk merchant account – one that will, unfortunately, come with some very high processing rates. Until the day arrives when CBD products are fully legalized in all 50 states and approved by the FDA, we don’t anticipate that low-risk merchant accounts will become available. Also, be aware that some providers accepting CBD merchants impose additional restrictions beyond those typically required for a vanilla high-risk account. Some providers will only accept established businesses, while others impose a very high minimum monthly processing volume. Be sure to discuss these restrictions when you obtain a quote from any provider.
How To Choose Credit Card Processing For CBD Products
Finding a good high-risk merchant account provider for your CBD business involves the same criteria as a low-risk provider. It’s just harder to find a provider that offers the right combination of reasonable prices, fair contract terms, and high-quality customer service. Here are the most important considerations:
- Account Approval: The underwriting process required to get approved for a merchant account can be tedious for any merchant, but it’s particularly difficult if you sell CBD products. Nonetheless, completing this process before you start processing credit card sales can save you from having your account suddenly shut down once you’ve started using it. You should be skeptical of providers offering “instant” approval of your merchant account, as they often defer this critical step until after you’ve already signed a long-term contract.
- Pricing: The bottom line here is that any high-risk merchant account is going to cost significantly more than a comparable low-risk one. Be prepared to have to accept a tiered pricing model (although some established businesses might be able to negotiate a more affordable interchange-plus model). You can also expect to be charged higher monthly and annual fees as well, although the difference in these costs isn’t as much as it is with processing rates. Another additional “expense” that most high-risk merchants have to contend with is a rolling reserve. That’s where your processor withholds a certain percentage of your funds every month until the reserve is met. While you’ll eventually receive all your money, rolling reserves can create serious cash flow problems for a small or newly established business.
- Contracts: While we prefer month-to-month billing arrangements that don’t lock you into a long-term contract or force you to pay an early termination fee (ETF) if you close your account early, CBD merchants will usually have to accept both a long-term contract (typically for three years) and an ETF. Be aware that almost all long-term contracts include an automatic renewal clause that extends your contract, typically for one-year periods at a time.
- Processing Hardware: If you plan to sell CBD products out of a retail location, you’ll need a dedicated countertop credit card terminal or a mobile processing system that uses your smartphone or tablet in conjunction with a mobile card reader. Your terminal should be able to accept EMV payments at a minimum, and preferably NFC-based (“contactless”) methods as well. For some specific recommendations, check out our article, The Best Credit Card Machines & TerminalsFor Small Business. We also highly recommend that you purchase your terminals outright rather than leasing your equipment. Leasing arrangements lock you into noncancelable long-term contracts, and you’ll wind up paying several times more in leasing fees than what your machine is worth.
- eCommerce Support: Naturally, you’ll want to be able to sell your CBD products to as many customers as possible, and selling via a website allows you to do that. As we’ve noted above, there are still many legal grey areas regarding CBD sales across state lines that you’ll want to be aware of before you launch your website. At the same time, the recent legalization of hemp-based products is creating eCommerce opportunities that weren’t there as recently as three years ago. All of our recommended providers can set you up with a high-quality payment gateway that will allow you to process transactions over the internet and significantly expand the reach of your business. As not all states have relaxed their marijuana laws, you’ll want to find a gateway that will automatically filter out customer addresses where CBD products are still restricted.
- Customer Support: In researching dozens of merchant account providers, we’ve found that high-quality customer service is the real secret ingredient that separates the merely average providers from the truly outstanding ones. Customer support issues occur more frequently with CBD and other high-risk merchants, so you’ll want to pay particular attention to a provider’s reputation in this area.
CBD Payment Gateways & eCommerce
While they’re essential for eCommerce, payment gateways are increasingly finding their way into retail businesses as well, often as part of an integrated payments platform. Although the core function of a payment gateway is to process a transaction over the internet, integrated platforms add many additional functions, including inventory management, employee scheduling, and sales analytics and reporting. Integrated platforms allow you to manage your business from anywhere – as long as you have a device with a web browser and access to the internet.
Before you can use a payment gateway to sell CBD products, however, you’ll have to have an account with a payment service provider (PSP) or merchant account provider that has approved this activity. Many fledgling CBD businesses have ground to a halt because the merchant didn’t realize that their provider expressly prohibited CBD sales until it was too late. Getting your account shut down can make it more difficult to find a new provider that will approve you, so it’s critically important that you sign up with a company that explicitly supports CBD sales and be completely honest about the nature of your products during the onboarding process. Here’s a summary of the policies regarding CBD sales of some of the most well-known payment processors:
Square CBD Policy
In the early days of the CBD industry, many merchants simply signed up with Square, only to quickly have their accounts terminated when the company discovered what they were selling. Today, Square openly accepts CBD merchants through a specialized program. Introduced in 2019, this program imposes processing rates that are significantly higher than Square’s low-risk rates. However, there are no long-term contracts or monthly fees, and you’ll still have access to the company’s ever-expanding lineup of products and services.
PayPal CBD Policy
While PayPal will allow almost anyone to sign up for a business account, its Acceptable Use Policy has always prohibited using its platform to sell any CBD products. Violation of this policy will result in the closure of your PayPal account. As of 2021, this policy is still in effect, and we haven’t seen any indication that it will change anytime soon.
Shopify CBD Policy
Shopify supports the sale of hemp-derived CBD products (but not marijuana-derived products) in states where it’s legal to do so. However, you’ll have to sign up with a third-party payment gateway provider (DigiPay and PinWheel are the only choices at the moment) and ensure compliance with all applicable state and federal laws. The Shopify Payments credit card processing service is not available for CBD sales at this time.
BigCommerce CBD Policy
BigCommerce offers extensive support to CBD businesses, including access to a choice of over 65 third-party payment gateways. The company also provides extensive information about the ins and outs of running a CBD business on its website, and is an excellent resource to refer to when setting up your CBD business.
Authorize.Net CBD Policy
Visa-owned Authorize.Net doesn’t like to talk about CBD, but the truth is that you can process CBD sales over the Authorize.Net gateway. In addition to other legal requirements, you’ll have to be using a merchant services provider that has approved your business for CBD sales. This shouldn’t be a problem, as PaymentCloud and many other CBD merchant account providers use Authorize.Net as their primary gateway option. Note that if you’ve signed up for payment processing services directly through Authorize.Net, you probably won’t be able to use that account for selling CBD products.
Check out our full post on how to sell CBD online to find the eCommerce right platform for your shop.
Which CBD Payment Processor Is Best For My Business?
Despite the passage of the 2018 Farm Bill and the deregulation of hemp and hemp-based products, the CBD industry continues to struggle with a mass of conflicting state laws that make it challenging to find a merchant account. Elavon’s abrupt decision in 2019 to pull out of the industry altogether left many CBD merchants struggling to find a substitute provider. As of early 2021, the availability of CBD payment processing continues to expand as reputable providers such as Square now openly offer CBD payment processing.
At the same time, the industry continues to suffer from a combination of conflicting regulations, a high chargeback rate, and an often-erroneous association with the marijuana industry. For these reasons, CBD merchant accounts can be unusually expensive – even compared to other high-risk industries – and consumers ultimately bear that cost. We firmly believe that the regulatory issues affecting the CBD industry will get sorted out – eventually. The process of updating the law is never swift, and with 50 different legislative bodies working independently on these issues, it will probably be quite some time before most major banks and direct processors will feel comfortable working with the CBD industry. Further action by the Food and Drug Administration (FDA) is also critical to the future of the CBD industry. If the FDA finds that CBD products are medically effective, there is the risk that they’ll be restricted to prescription-only status. At the same time, FDA studies that fail to back up the numerous health claims made by CBD proponents could doom the industry altogether.
As long as you meet their acceptance criteria, any of the five providers we’ve highlighted above should be able to provide you with high-quality service at a reasonable price. Square is probably the best and most reliable option available for smaller CBD merchants or those just starting out. PaymentCloud, Easy Pay Direct, and SMB Global are better choices for larger businesses that need the stability of a full-service merchant account.
If you’re in the process of launching your CBD business, you may need a business loan in addition to a payment processor. Our article, How To Get A Loan For Your CBD Business (Without Getting Scammed In The Process), offers some great tips and recommendations, so check it out!
In Summary: The 6 Best CBD Merchant Services Providers
: Best choice for merchants selling topical CBD products and seeking personalized customer support. : Best choice for merchants who want to use Clover terminals. : Most affordable choice for low-volume CBD merchants and startups. : Best choice for merchants looking for transparent pricing and a domestic merchant account. : Best for merchants looking for interchange-plus pricing. : Best choice for high-volume CBD merchants.
Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.