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What are the Visa/MasterCard Rules Regarding Credit Card Payments for CBD Products?

Ginger Hollowell, owner of Electronic Money Company has been providing merchant services for small business clients across the United States and Canada for over 2o years. L4SB recently checked in with Ginger to learn more about the evolving rules and regulations regarding credit card payments for businesses selling CBD products.

Know Your Products.

The first step in understand merchant processing and CBD is to know the product you are currently selling or plan on selling in the future. If you are selling products that contains .3% THC or less, your business can accept credit cards for payments under the current federal rules and regulations. Customers are able to purchase your business’s CBD products both in physical locations as well as online. 

Honesty is Everything.

An important point to understand is that selling CBD means that you are considered a “high-risk” merchant account. So, prepare to have your application for merchant services scrutinized. This means it is critical that you are truthful when applying for card processing. Stating little white lies about your products or not providing full disclosure about all the products you are selling can result in your merchant account being canceled.  To avoid the headaches and losses of revenue during a shutdown, follow a legitimate process with full disclosure to a credit card processor that accepts high risk merchants.

Be Patient Through The Application Process.

The application process with a high-risk merchant services processors take longer and is much more involved than an application for regular low-risk credit card processing. The reason for this is because both the merchant processor and the underwriting bank are anticipating higher chargebacks than they would with other lower risk businesses. Now, here is where business owners insist their specific businesses do not experience abnormally high charge back. Understand that it simply does not matter because the national average is high. This also means the credit card processing rates you are charged will be a bit higher as well.

Here is a summary of the transparent process of getting a proper CBD merchant account.

  • Certificates of Authentication (COA) are required, listing all the ingredients of your products and their percentage make-up in the product.
  • Traditional COAs must provide potency results, terpenes results, and sample results.
  • The merchant must grant the processor access to scan their POS system intermittently, and usually once a month, to ensure no unapproved products have been added to the merchant offerings.
  • With online CBD sales, the processor frequently scans the website for products not approved on the merchant application.
  • If a product has been added that has a higher THC level greater than .3%; the processor shuts down the merchant’s total processing until the added product is removed. 

Thinking of starting a CBD based business? Set up your business correctly from the start. L4SB knows the Cannabis Business. Reach out to L4SB today for a consultation.

Law 4 Small Business, P.C. (L4SB). A little law now can save a lot later. A Slingshot company.

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