Merchant Account Providers Begin to Compete for High-Volume CBD Businesses

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Oct 14, 2020, 08:38 ET

SCARBOROUGH, Maine, Oct. 14, 2020 /PRNewswire/ -- For most businesses, setting up a merchant account to accept credit cards is as simple as hopping online or visiting their local bank. For high-volume businesses processing more than $100,000 a month in transactions, credit card processing is essentially a commodity, often with multiple providers vying for their business and offering rates nearly "at cost" in exchange for stable, low-risk merchant-account volume. Until recently, CBD business owners, both online and brick-and-mortar, have not benefited from this competition. According to Alex Roy, president of E-Commerce 4 LLC – the parent company of Organic Payment Gateways, a CBD merchant account and payment gateway provider – this is all beginning to change.

Alex described the current high-risk merchant account environment, at least as it applies to CBD, this way: "The CBD payment processing business is still relatively new. As recently as 18 months ago, the CBD industry was still reeling from what we refer to as 'The big CBD shutdown.' In the spring of 2019, thousands of CBD business owners, both internet-based and face-to-face, woke up to a shock: an announcement by the largest CBD merchant account provider at the time that they were no longer going to allow CBD transactions – beginning in 45 days."

The reason for "The big CBD shutdown" is still a little murky, but it led to a scramble as businesses tried to replace their ability to accept credit cards before the deadline. Industry experts often point to the relatively unclear regulatory environment related to CBD at the time and the fear of losses by the credit card processors.

The regulations surrounding the sale of low-THC CBD only began to loosen after the 2018 Farm Bill, signed into law by President Trump on December 20, 2018 , placed hemp and cannabis derivates with extremely low psychoactive compounds outside the scope of the Controlled Substances Act. Once the Farm Bill became law, a major processor jumped in, only to later become concerned with losses due to chargebacks and regulatory scrutiny.

"It took a long time for the merchant account industry to settle in, and for a long time, business owners felt like they had few options. They were lucky to be allowed to accept credit cards," Alex explained.

The lack of competition meant that unlike low-risk business owners, CBD merchants had little competition for their business and therefore were unable to negotiate rates, even when they fell into the high-volume category.

Alex Roy describes the current merchant account environment for high-volume CBD businesses this way: "Processors are beginning to compete for large-volume, low-chargeback CBD businesses. Chargebacks are a huge concern for payment processors as they are ultimately liable for these (mostly) consumer-driven transaction reversals. These are, in effect, forced refunds. What we have done at OrganicPaymentGateways.com is implement a free, online, automated placement tool. This allows us to easily gather basic information about a CBD business, and then pre-screen them at multiple payment processors. For CBD businesses processing more than $100,000 a month, this process can save them many thousands of dollars a year."

Although, like any new industry, there are bound to be more surprises. Thankfully for high-risk business owners, it appears that payment processing for CBD is turning a corner, and so are the businesses that need it, especially those that have proven the ability to follow the applicable rules and manage their client satisfaction effectively. To learn more about the Organic Payment Gateways payment gateway and CBD merchant account online placement tool, visit OrganicPaymentGateways.com

Sources:

https://www.agriculture.senate.gov/2018-farm-bill

https://ecommerce4im.com/chargebacks/

https://organicpaymentgateways.com/cbd-payment-gateways/

About Organic Payment Gateways:

Organic Payment Gateways is a payment gateway provider with a goal of making it easier for CBD and hemp website owners to accept credit cards online. With years of experience, the US-based company specializes in payment gateways, credit card processing suggestions, web marketing, and chargeback mitigation.

Media Contact
Alex Roy
800-570-1347
[email protected]

SOURCE Organic Payment Gateways