Cannabinoid oil, usually abbreviated as CBD, is now legal to purchase in most U.S. states. Experiencing rapid growth with each passing year, products in this category include gummies and other edibles, topical salves, and capsules. If you are looking to jump into this burgeoning and profitable niche, you will need online CBD payment processing.

What is CBD oil?

In 1940, Dr. Roger Adams and other scientists from the University of Illinois were the first to identify the so-called cannabinoid, an extract from marijuana and hemp plants. This molecule does not have the same psychoactive properties as THC, leading to wider acceptance among consumers eager to tap into its therapeutic properties. Even so, consumers and government officials alike remain concerned that false claims might be made, leading to the placement of CBD product sellers into the category of high-risk merchants.

What is online CBD payment processing?

In 2018, the Farm Bill was signed into law by President Donald Trump. This legislation removed hemp from the definition of marijuana under the Controlled Substances Act. As a result, a large number of ecommerce retailers suddenly were free to begin selling hemp-derived CBD products.

Although many forms of CBD are legal in most parts of the country, the industry is considered to be high-risk. In fact, the Food and Drug Administration has still not clarified all of the regulations that bind this sector. Potential problems that you will most likely encounter as a CBD seller include the following.

• Higher transaction rates.
• Rolling reserves.
• Longer-than-average holds on funds.

For this reason, you may need to do business with a high-risk payment processor who is knowledgeable about the CBD industry and who will provide you with a payment gateway that will allow you to conduct safe and secure transactions.

The characteristics of a good CBD payment processing gateway.

Since you will be entering a new industry where rules and regulations remain nebulous, you should devote time and care to the selection of your payment gateway. During your research, look for a vendor with the following characteristics.

• Willing to accept you as a high-risk merchant. Like it or not, this youthful sector is in that gray area between legality and contraband. The result will inevitably be added chargebacks and fraud. Expect to pay more in fees as a result, but also demand that your payment processor be familiar with the requirements to help maintain compliance.
• Integrates seamlessly with your existing systems and software. Even though you may now need a high-risk payment gateway, that does not mean you have to get rid of the accounting, ecommerce, and other systems that have been working well for your business. Instead, your new gateway should interface flawlessly with what you already have in place. Opt for a gateway that uses API integration, which enables you to monitor your gateway and view it from your consumers’ perspective.
• Includes POS system integration. Modern point of sale systems can be incredible time savers, assisting you with inventory, employee, and customer management, data analytics, reporting, sales forecasting, and much more. If you don’t already have a POS system that your new high-risk gateway can connect to, find a vendor that can help you bring one on board to take your CBD store to the next level.
• Low fees. Although you will be expected to pay more as a high-risk business, not all charges are non-negotiable. Therefore, shop around to find competitive prices on statement, compliance/non-compliance, terminal, and monthly/annual fees.
• Customer service. Before you establish a formal relationship with your high-risk payment gateway provider, be sure that they are prepared to give you quality customer service. Should service interruptions, fraud, chargebacks or other problems arise, you need to know that your vendor is equipped to support you. To that end, get specifics on how they deal with these situations, and be sure that you have access to someone on their team at all times.

Next steps.

Once you have settled on a high-risk payment gateway vendor that will meet your requirements, you will need to open a CBD merchant account. This will include the following steps.

• Fill out and submit an application online or by mail.
• Prove your identity.
• Provide documentation about the CBD products you sell, including evidence that they have passed stringent testing and are of high quality while complying with applicable state laws and requirements.

While it may be tempting to gloss over the fact that you sell CBD and simply identify your business, for instance, as health and wellness-related to get lower rates with a conventional payment platform, this strategy could backfire in a big way. First of all, intentionally misrepresenting your store or its products and services may result in Unfair and Deceptive Trade Practices and fraud, resulting in fines and penalties from the Federal Trade Commission as well as the card brands. Moreover, when—not if—your deception is discovered, your entire business could be closed down permanently, leading to lost revenue, a potentially fatal hit to your brand with possible bankruptcy and criminal charges.

Electing to go with a high-risk payment processor can help you to avoid unnecessary financial and identity checks during the application process. It also makes it possible to easily grow your business because your dealings are entirely transparent. Additionally, you can rest assured that your business will not arbitrarily be shut down because a conventional bank suddenly deems your CBD business to be too risky.

In many respects, you are a pioneer in the exciting niche of CBD. However, that does not mean this sector isn’t booming. Already, an estimated one in seven Americans uses CBD products. Considering that experts forecast that CBD sales will skyrocket to $23.7 billion by 2023, it is unquestionably a sector that is moving in a positive direction.

When you open a CBD merchant account, you can expect to reap numerous benefits. For one thing, you’ll be able to accept multiple kinds of payments in-store and online. Furthermore, you will have all you need to easily handle returns and refunds. With the built-in security features, you can protect your systems and customer data and can manage your funds effectively at every stage of the payment process. Once you have established a relationship with a high-quality CBD payment processor, you can become a part of one of the most dynamic sectors in modern ecommerce.