While there are no doubt countless benefits to starting your own CBD business, there are also many difficulties that come with the process of setting it up, such as deciding on which payment processor to use. By now, you’ve probably realised that a multitude of financial institutions don’t support businesses that are in the CBD industry. However, although this may seem like a major roadblock, it’s not the end of the world.
The good news is that things are much better than before. Now, you have many more options, and, better yet, many more payment processors are willing to work with CBD businesses. However, don’t just settle for the first one willing to help you. You need to choose the one that is right for your business. Here you’ll find everything you need to know about payment processors and the factors you need to consider before selecting one for your business.
What exactly is a CBD payment processor?
So, what exactly is a CBD payment processor? Essentially, a CBD payment processor is just like any other payment processor.
A payment processor acts as a middleman between you and the bank. It enables online transactions and allows customers to use payment cards (credit or debit) to pay for goods and services on your e-commerce store. It can also authorise transactions and ensure you get paid on time.
The payment processor communicates with four parties, namely:
- Customer’s card
- Customer’s personal bank account
- Merchant (you)
- Merchant’s bank account (your bank account).
This communication allows the funds to move from the customer’s account to yours when they make a purchase.
Besides managing transactions, payment processors are also responsible for security checks. They do this to prevent fraud, ensure that the customer’s card details are correct, and confirm that they have sufficient funds to make the transaction.
Furthermore, they also take care of any issues that may occur, such as:
- Customer being overcharged
- Error with a transaction
You may need to pay a small fee for every transaction managed by the company, or even additional costs for chargebacks. However, this depends on the company you work with.
Some payment processors also provide a payment gateway that connects your account with the payment processor and card companies, such as Visa and Mastercard. This is necessary so that your processor can communicate with both your and your customer’s bank accounts so that you can receive payment.
How to find the right CBD payment processor for your business
Yes, finding a payment processor willing to work with businesses in ‘high-risk’ industries such as CBD can be tricky. Some may even refuse point-blank to work with your company.
Others are willing to start working with you, but as soon as they find out they are going against company policy by working with your company, they might freeze your account or even your funds. Sometimes, you may be subjected to more severe penalties. This is why it is so important to do your homework before deciding on a processor. If you go into it blindly, you may end up regretting your decision.
Are they a ‘high-risk processor?
The CBD industry is seen as ‘high-risk’ because it is still relatively new and susceptible to fraud and charge-backs. The fact that laws surrounding CBD are constantly changing doesn’t help either.
Search for payment processors that have a portfolio of companies within ‘high-risk’ industries, such as:
- Adult products & services
- Cryptocurrency trading
- Online dating
- Online gaming
- Vaporiser/ e-cigarette companies
- Travel agencies
Processors that have already worked with companies in the above industries are much more likely to be willing to work with you and much less likely to end the relationship.
Does their software work with your platform?
The next thing you have to do is find out whether the payment processor is compatible with your e-commerce platform. You don't want to spend time building an expensive e-commerce platform only to discover your chosen payment processor isn’t compatible with it. Look for a payment processor that can integrate with your existing e-commerce site, instead of one that requires you to use their specific platform.
Also, consider the future of your business. As your business grows, you may need to change to different platforms. As such, you might want to opt for a processor that can be integrated into a number of different e-commerce platforms or one that operates using API integration. This popular payment gateway allows you to monitor your business and receive valuable customer insight.
How much do they charge?
When shopping around for a payment processor, keep your budget in mind to ensure you don’t spend more than you bargained for. Payment processing providers take a percentage of each sale that they process. The amount they take depends on the specific provider. In addition, some providers charge up-front registration fees along with other recurring fees, such as:
- Compliance or non-compliance fees
- Monthly/Quarterly or Annual fees
- Statement fees
- Terminal fees
Confirm all the fees you will be incurring before entering a contract.
Do their contracts suit your company?
Contracts, and the length of these contracts, differ from company to company. We recommend sticking to short-term contracts. This way, you can avoid an Early Termination Fee (ETF) if you want to leave the contract before it expires or if you feel the original terms of the contract are no longer suitable for your business.
Do they provide reliable customer support?
Good customer service is more important than you think, especially if you are just starting up. Therefore, you need to choose a provider that offers outstanding support and service. The customer support team will be dealing directly with your customers, which means the level of service they provide will directly reflect on your business.
Before entering into a contract, find out more about their:
- Anti-fraud measures
- Customer service policy
- Dispute resolution
Not all providers have a customer service team. However, this is not a train smash. Outsourcing customer service also has its benefits, as these teams are highly trained to provide the best service possible.
Does your business need a Point of Sale (POS) system?
Consider picking a CBD payment processor with an integrated point of sale system (POS). A POS system is handy for businesses and can save a lot of time and effort. POS systems can be used to help:
- Manage transactions
- Organise and store information
- Take payment
- Track inventory
- Track revenue and tax
It then summarises all that information into a report that can be reviewed when required.
The best CBD payment processors
As mentioned above, it is sometimes difficult to find a payment processor willing to work with high-risk businesses such as those in the CBD industry. However, it is not impossible, and several reputable providers are willing to work with your CBD business, such as Lumipay.
Lumipay is a payment processing and gateway provider in the UK. Having worked with a range of high-risk companies in the CBD industry, they have a wealth of experience handling data security, customer service, fraud protection and regulatory compliance.
Lumipay’s payment processor can be used with a range of e-commerce platforms, such as:
It even offers customers over 200 payment options, such as Apple Pay, so they can choose a payment method that suits them best.
Furthermore, Lumipay supports small and growing businesses with its flexibility by accepting subscription and instalment payments to help them get on their feet. Lumipay is the best payment processing provider for any CBD business in the UK and Ireland.
Choosing a payment processor for your CBD business is not a decision to be brushed aside. Take the time to find out more about potential CBD payment processors so that you can make the best choice for your business and not end up regretting your decision.
Now that you know exactly what to look for when picking a CBD payment processor, why not take a look at our wholesale range to stock up on top-quality CBD products? By going the wholesale route, you’ll have less to worry about when setting up your business. You can’t go wrong with Poko products!