What you don’t know about CBD payment processing can hurt you

What you don’t know about CBD payment processing can hurt you

Recently we had an inquiry from a medical professional seeking CBD payment processing. While in his medical practice, he was amazed at the effects CBD had on his patients as a remedy for inflamed muscles, pain, nausea and anxiety. So he started selling it at his office, then had the idea to sell it online off his website.

It’s a good thing he called us about possible payment solutions. We may have saved him from landing on the Terminated Merchant File.

Because we offer many high risk payment processing solutions, we’re well-familiar with the complexities and small – yet very important – details of CBD payment processing, and we pass that knowledge on to our merchant partners. Merchants simply need to know everything they’re taking on when applying for a CBD merchant account.

We caught our medical professional by surprise. In our conversation about selling CBD online, he had mentioned that he sold CBD supplements out of his office and how successful it was. He had no inkling that he was in breach of his merchant account contract for his medical practice, and he was mortified to learn that his acquiring bank could terminate his merchant account for his medical practice on the spot.

We explained that his medical practice is a completely different entity from selling CBD oil, that when he was approved for his merchant account, it did not include the option to sell CBD to his patients.

“Merchants don’t really think about that,” said Wendy Jacques, Sales Manager at Instabill. “He was stunned at the process involved to gain an approval for an e-commerce merchant account for CBD. It’s a good way to end up on the TMF list.”

Sadly, it’s not the first time we’ve seen this

Knowingly or unknowingly, we’ve seen merchants over several industries – nutraceuticals, pharmaceuticals and even beauty products and weight loss – make this mistake. Many merchants wrongly assume they can add CBD oil to their list of offerings simply because they may feel it is relevant to their industry.

That can be a fatal assumption for any business.

Because CBD payment processing can be difficult to get, we’ve found and read about merchants in completely different industries offering CBD, and sometimes illegal and illicit substances, under the guise of other products. That’s known today as transaction laundering – a surefire way to land of the TMF list.

Why do banks consider CBD a high risk industry?

In a nutshell, acquiring banks are leery of CBD payment processing because of its link to marijuana. The hemp plant is comprised of cannabidiol (CBD) and THC. While THC is the psychoactive, painkilling chemical in marijuana, CBD is a natural analgesic with hardly traceable amounts of THC. The association itself, we’ve found, is enough to scare off certain acquiring banks. Our acquiring banks, however, welcome CBD merchants with the right criteria, such as:

  • Straight e-commerce sales (we offer no solutions for a virtual terminal).
  • Proof the merchant can generate a minimum of $1,500 per week in sales.
  • Four to six months of payment processing history with banking statements showing company name, total sales, chargebacks and refunds.
  • Endure a 10 percent rolling reserve

Instabill among the best in CBD payment processing by CardPaymentOptions.com

Recently, Instabill was named among the best payment processors for CBD merchants by credit card processing industry watchdog CardPaymentOptions.com, and among the best high risk merchant account providers by both Card Payment Options and MerchantNegotiators.com.

We believe we’ve earned these distinctions for two reasons:

  • Our large network of domestic and international banking partners
  • Our ‘old-school’ approach to customer support: live and one-on-one

We prefer to begin our merchant account partnerships with a conversation, which can be had by calling our home office direct in Portsmouth, N.H., U.S.A., at 1-800-530-2444.

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