The Elavon – US Bank Bombshell
Selling CBD Oil online just got more difficult again. Right before the start of CBD Expo Midwest, Elavon told their merchant brokers that they are getting out of the CBD business and brands who were currently using them had 45 days to find a new home.
Disruption with Elavon – US Bank Pulling Out
Elavon – US Bank was a great thing to happen to CBD brands. They were driving down the transaction prices to somewhere in the 2% range with no reserve. This basically meant that CBD brands could sell their products without being considered high risk.
When I was first getting involved in the CBD industry in mid-2018, I couldn’t find a merchant partner who could get below 6% per transaction. So being able to process at less than 3% was great.
Now that they’ve pulled out, it’s caused a big disruption in the space. Currently, there are about two banks that are taking in CBD brands but they are prioritizing those who are selling more than $100k/month and their rates are going up. If you’re a startup in the CBD industry right now, you’re probably looking at around 5% transaction fee along with a reserve.
The Future of CBD Merchant Processing
While there’s going to be a bit of a pain to sell online and be costlier, it’s only temporary. Once the dust settles, I expect there to be another bank or banks that will coming along and there will be another “race to the bottom” for rates.
So if you’re a startup, it’s probably going to take you a little longer to get approved for a merchant account. You’re looking at 3-6 weeks as long as you have all your papers in order and submit them as soon as they ask for certain documentation.
Being able to sell CBD online is a huge competitive advantage. So although it’s a bit more expensive to sell online, as well as difficulty. You can set yourself apart by actually being able to.