CBD is currently under scrutiny in the US. That means according to American Federal laws CBD products are illegal in the country. However, considering the benefit of CBD, CBD is legal in all 50 states as long as the product doesn’t contain any THC. It gives CBD new potential to dominate the market where people don’t want to have anything to do with Marijuana. Many entrepreneurs have already started their journey selling CBD online and offline. Of course, they will also have CBD merchant accounts handy to be able to take credit card payment or ACH Payment.
If you have already got your CBD merchant account approved and don’t know what to do next, here is all you need to know about CBD merchant accounts.
Why a Bank Considers Merchants Selling CBD Products a High-Risk Business?
CBD business is considered high risk for merchants due to its association with the psychoactive compound; it is deemed especially by lenders and banks. A very few banks allow CBD merchants to carry their online payment processing due to the risk involved.
Even though the American government has issued a guideline to banks to take financial measures for dealing with marijuana businesses, many banks avoid it to get in trouble with the laws. The banking industry does not even make contributions to provide the extra resources required to help CBD businesses flourish.
That is where CBD merchants look for decent e-commerce platforms for selling CBD products and require merchant accounts.
How to Keep a CBD Merchant Account in Good Standing with a Bank Processor
The number of payment solutions for CBD and Hemp businesses is increasing as CBD and Hemp companies are exploring various legal methods that comply with strict banking laws. This way, they do not have to deal in cash and can be protected from fraudulent transactions. Following are the ways a CBD merchant can keep his account in good standing with a bank processor.
Step 1: Finding the right merchant account provider
- It is essential to ensure that your payment processor is not only familiar but also understands the legal implications and complications in the CBD industry.
- Choose a payment solution company that has a strong relationship with the banks and works with merchants that sell CBD and Hemp products.
- Choose a payment solution provider that can provide you access to get a business checking account, and savings account with an FDIC member bank that openly supports merchants that sell CBD and Hemp products.
- Your CBD merchant account should provide you with the ability to accept debit and credit card payment processing.
Step 2: Avoid wrong doing with your merchant account
Getting your merchant account closed without any prior information is not less than a nightmare for your CBD business. It can have many long-term ramifications on your current operations and also future business endeavors. That is why knowing the reasons that can put you in this dangerous situation are important. Your merchant account can be closed because:
- Any suspicious activity – that involves fraudulent transaction on behalf of another merchant can lead to the termination of your merchant account.
- Fraud – misuse of debit or credit cards, fake transactions, overcharging customers, and failure to deliver other merchandise can be the reason for
- Chargebacks – xcessive chargeback or credit cards refund can be a leading cause of your merchant account closure.
- Secured Website/E-Commerce Store – Make sure your website where you accept payment or processing credit card is secured and PCI compliant. Bank don’t want to take any risk because of your own fault.
Step 3: Prevent Fraudulent Credit Card Transactions from a Merchant’s Customers
Following steps are must to prevent fraudulent credit card transactions.
- In case you find any suspicious activity, contact your payment processing service provider to advise you on how to best address chargebacks and how to minimize them or eliminate them.
- Make sure your AVS (address verification system) works accordingly because if it fails, the transaction will not be processed.
- Use the card verification method that uses a CVV security code of 3 or 4 extra digits. If the transaction is made using a stolen card, the person can be easily caught.
- Adding a chargeback prevention service will help to protect your account.