The landscape has changed as of January 2020.
There are some attractive options available for brands who are looking for CBD merchant processing due to an increasing number of domestic banks opening up. In one of my previous posts from last year, I wrote about the disruption that Elavon and US Bank inflicted on the industry when they decided to not allow CBD brands to use their services anymore. If you were an established CBD brand with good credit card processing history and processed a couple hundred thousand dollars a month, you were likely to find a home.
If you were a small CBD brand, you were out in the cold, scrambling to find something other than eCheck to get online sales.
This left most smaller brands with the option of using a merchant provider like T1 Payments but based out of the UK. This meant that these smaller brands would basically have to set up a UK entity of their business in order to get a merchant account, plus a bunch of other hoops they’d have to jump through in order to sell online.
Fast Forward to 2020
Some changes starting happening in the space. Shopify publicly announced that they are now “cool” with CBD brands selling on their platform but you just can’t use Shopify payments for the processing. You’d have to find your own merchant processor. The good news here is that I can help you find a merchant processor that works exclusively with Shopify for CBD. Just send me a note on the contact page and I’ll make the introduction.
BigCommerce also came out and said, “hey, we’re cool with CBD brands too!”. But it’s still the same scenario, you have to BYOM (Bring your own merchant).
The company I used to work for, Nexcess / Liquid Web, has been CBD friendly for a very long time. I started the initiative of helping CBD brands in the summer of 2018. We’ll help you find a merchant processor and we have some great ecommerce platforms for you to sell on like Managed WordPress, WooCommerce, and Magento. I’m just naming a few but we have plenty more options for you to choose from.
Ok, sorry for the shameless plug about my company, but I guarantee you won’t find a better solution and frankly a better partner than us to help you grow.
What CBD merchant processing options are available today?
As of January 9, 2020, there are 5 domestic banks that are allowing CBD brands including startups to process with them. The transaction rates are between 3.5% – 6% + .30 per transaction. That’s definitely more attractive that having to do offshore. However, it’s kind of a crap shoot regarding what your terms are going to be. Once your application gets to underwriting, it’s up to the person processing the application that’s going to dictate the terms. For just about 90% of them, the restrictions you’re going to face is not being able to sell hemp flower or CBD vapes on your site.
The other option gaining traction is Square. They started a CBD beta program sometime Q3 2019, only selecting a certain amount of CBD brands to use their processing platform. They’ve now opened it up to the entire world to apply, and I’ve talked with a number of CBD brands who’ve been successfully onboarded with them.
Their transaction rate for CBD is around 4.3% +.30 per transaction and you’re likely going to be restricted from selling hemp flower and CBD vapes. Square has a nice integration with WordPress and WooCommerce based stores. Shopify and Square are competitors so there’s not a simple integration. It can be done but you’re likely going to need help from a web developer to get it configured. And remember, Shopify is going to add 2% per transaction since you’re not using Shopify Payments.
The only hesitation I have around Square is that they’ve been onboarding plenty of CBD brands and it feels like there could be a similar situation with what Elavon decided. At some point, they might realize that they can’t keep an eye on all the CBD brands they have, making sure those brands aren’t selling restricted products, and decide to pull out.
Don’t Get Discouraged
The path to getting a merchant account can be a massive headache. I get it, I’ve helped hundreds of CBD brands find a merchant processor. I can’t guarantee that everybody who talks to me gets one, but I can promise you that the people I introduce you to are vetted and legit. If you need help, feel free to reach out to me. Again, I don’t charge for this at all, it’s completely free!