Merchant Accounts and eCheck For Hemp & CBD Oil
SoarPay Offers eCheck Processing For Hemp & CBD Oil Businesses.
Why CBD Businesses Are Considered “High Risk”
Many credit card processors, and other payments companies, do not accept CBD-related businesses for several reasons…
- CBD oil, because of its association with hemp and THC, has a complicated and fast-shifting legal framework in the United States. As a result, for a sponsor bank to support the industry they must understand and keep a dedicated eye on it. Many banks and processors are unwilling to do so.
- Because CBD Oil is relatively new, there are differing levels of quality in CBD based products, posing additional chargeback risk to the credit card processors, and risks to providers of other payment methods.
- Finally, CBD oils, creams and related products are simply new products. Because of this, many sponsor banks, credit card processors, and payments companies, simply have not changed their underwriting rules to reflect these new products.
Soar Payments, by contrast, is proud to serve the hemp & CBD oil industry with eCheck processing. Our extensive relationships with processors and sponsor banks who specialize in underwriting businesses that may be perceived as “high risk” enables us to confidently support hemp based CBD related businesses. Moreover, we are experienced with the application and underwriting challenges that CBD businesses often face, and can help assist to make the approval and setup process easy.
Frequently Asked Questions
Here are common questions specific to Cannabidiol and CBD merchant accounts:
Why does SoarPay only offer CBD eCheck processing at this time? Why can’t I get approved for a CBD credit card processing account as well?
Unfortunately, though CBD is legal to sell, there are still regulatory questions around the entire industry given that CBD is often ingested. This regulatory uncertainty has made it so that sponsor banks are unwilling to underwrite CBD businesses for credit card processing.
Furthermore, there have been incidents of businesses selling CBD using merchant accounts to sell products with THC much higher than the 0.3% rate as required by the federal government for sale. These “bad actors” have forced the entire credit card processing industry to pause or severely restrict support at this time.
eCheck remains a viable payment alternative, as underwriting banks are more comfortable with the lower risk elements of eCheck processing. Furthermore, eCheck processing is not affected by the decisions of card issuers (VISA, MasterCard, AmEx, Discover).
If you have any further questions, or need further clarification, please call us for full details.
I see other CBD businesses accepting credit cards, why can’t I get set up?
A small number of CBD businesses have been able to find unique processing options due to pre-existing partnerships, trial partnerships, and their sales volume (usually north of $500,000 per month). Other CBD businesses accepting credit cards may have processors who are uninformed about what is actually being sold, or they are utilizing offshore credit card processing options.
Aside from these rare exceptions, currently there are no widespread credit card processing options available for the CBD industry, especially for newer businesses or those with lower sales volume.
What is eCheck processing, and is it the same thing as ACH processing?
An eCheck (or electronic check) is an electronic version of a paper check used to make payments online. Anyone with a checking account can pay by eCheck.
To make a payment with an eCheck, customers simply provide their bank routing number, account number, and name on their bank account in a secure online portal. From there, a check is generated and sent to the merchant’s bank, where the funds are deposited.
eCheck is slightly different than ACH, as the funds are not directly wired between accounts. Put another way, ACH, or Automated Clearing House, refers to the process used to move money electronically between bank accounts. An eCheck is an abbreviation of the term “electronic check,” and is a payment method.
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Regulatory Challenges In Cannabis And Related Businesses With Joshua Radbod of Avantpay
Businesses in cannabis, CBD, hemp, and related industries face unique challenges when it comes to banking, credit card processing, and more. Fortunately there are companies (like Soar Payments!) working to help businesses in such industries navigate these challenges.
Listen along as Joshua Radbod of Avantpay, impartial conference facilitators for private & public sector experts in payments, cannabis, and cryptocurrency, joins the podcast to discuss.
Our podcast explores the fast-changing world of payments and fintech through interviews with thought leaders around the world. From credit card processing to bitcoin, and digital banks to finance software… we cover it all!