What do CBD Oil merchants and merchant account providers have in common? Well, in early December, 2018, congress passed a farm bill that made it possible for CBD sellers to accept credit cards. This isn’t just the punchline of a bad joke, it’s something to celebrate! Cannabidiol oil merchants can expect a 40% growth in their sales now that electronic transactions are a possibility according to the Brightfield Group. CBD Oil merchant services can be used either in store with a terminal or online via eCommerce.
So, how is this technically possible? CBD oil is processed from cannabis, which was federally illegal prior to this December. Since the Farm Bill changed that, hemp-based CBD oil is now fair game on a federal level. Although almost everything ‘cannabis’ is de-criminalized in various states, credit card processors weren’t allowed to provide payment solutions for CBD oil merchants because it was federally still a Schedule I drug. As a Colorado-based payment processing reseller, PayFrog is excited to now offer CBD oil merchant services nationwide.
As a Cannabidiol oil merchant, you’ll want to look for a couple things in your new credit card processor:
A Payments Company Comfortable with High Risk
You’ve probably been told before that your business type is “high risk”. Don’t be offended, as this probably has nothing to do with your managing skills. Sometimes businesses are labelled high risk because of how new they are, or their percentage of chargeback disputes is relatively high. Before you spend time applying for payment processing with a company that will waste your time and then still deny you, make sure they have experience working with high risk merchants. Some strategies they may offer you are charging their fees on a daily basis vs. a monthly one, or ask for a temporary reserve. A rolling reserve is when your processor holds a percentage of your card sales for a typical 6 month period. You then receive them back month after month. January’s would be given back to you in June, February’s in July and so on. DO NOT accept a rolling reserve contract with your processor if you are a CBD oil merchant. There are trusted merchant service providers that want you to get ALL of your hard-earned money right away.
Someone There to Explain the Application Process
CBD oil merchant services has a few more hoops to jump through than the average business type. You can expect just a few extra signatures and forms which will include:
- Your promise that you’re selling hemp-based CBD products and nothing marijuana derived, which is still federally illegal. As stated above, even if marijuana is legal in your state, your U.S. processor cannot help sell something that is federally illegal.
- Your contractual promise that all products you sell have THC levels less than 0.30%
- Lab results proving all your products have THC levels less than 0.30%
- All of your products and descriptions listed individually
- Your state retail tax ID#.
- Your website, which underwriting will review
[updated 5/30/2019] In addition, there are now stricter terms and minimums for merchants:
- Minimum $250,000 in monthly card processing volume history
- Reserve minimum of 5%, usually around 10% (depending on the individual case)
- eCommerce only
- Higher Processing Rates: ranging 6-10%
Underwriting is expected to take several weeks.
It always helps to have a guide to assist in submitting a proper and complete application package to underwriting. That’s why you need a credit card processing reseller. Our merchant services representatives can guide you through all of the requirements they have so you have successful application with the best chances of resulting in an approval.
CBD Oil Merchant Services is Available to You
As you know, a Cannabidiol oil business requires a little more TLC than others. PayFrog is here to make sure you receive it. Let’s celebrate the new availability of credit card processing for your business by walking through the application today! You can not apply on our website for this program; instead you’ll need to contact us for a unique CBD oil merchant application with a special provider.