Vendors of hemp products have generally had a tough time finding secure payment processing companies for their businesses. And until marijuana is fully legalized, the industry is expected to remain high risk, with limited options for marijuana businesses to manage and process payments. Many banks and payment processors will most likely not work with companies related to the industry, which is why most businesses prefer to accept cash only.
Why Most Banks Refuse to Work with Hemp Businesses
A large number of banks have repeatedly refused to provide their services to marijuana related companies, owing to the illegal nature of marijuana at the Federal level and the high-risk nature of the industry. Although more banks are now working with marijuana businesses than in the past, it’s still virtually impossible to be approved by any major banks in some states.
Some business have found different kinds of workarounds such as using a “Cashless ATM” system, which allows customers to swipe their card, key in their PIN, sign a receipt and even get change for the amount they paid. Nonetheless, all this does is add a third-party intermediary to the process, and it might not be what every customer or vendor is willing to work with.
Why You Need a Credit Card Processor for Your Hemp Business
For most high-risk business models, the presence of a stable payment system is crucial. In fact, that’s what card-processing services are like https://thesoutherninstitute.com/marijuana-credit-card-processing/. It’s quite fortunate that there are several companies that offer electronic payment solutions for business that sell hemp products.
Opting for marijuana card processing can help your business appeal to the different types of customers, including the younger ones who may not carry cash. A reliable payment processing service ideally lets merchants to offer a wider variety of payment options in hemp-related businesses, including marijuana dispensaries and delivery services, both in physical location and online.
Payment Options for Cannabis Businesses
If you’d like to offer your clients multiple options for conducting payment transactions for various cannabis products, one of the best options is the PIN Debit Program. This is a perfect alternative to Cashless ATM, since your customers will be able to make purchases for exact amounts ideally at the checkout counter with a single transaction.
With this mode of payment, the transaction runs directly over the debit network, and bypasses the MasterCard, Visa, Discover, and other card networks completely. Keep in mind that it’s still illegal to conduct payments in the marijuana business via the card networks. As such, this is one of the most effective ways of offering your customers a payment option while avoiding the risk of a miscoded merchant account, which will be shut down eventually and it might prevent you from opening one in the future even when the laws change.
If you sell hemp products online through an ecommerce site, you can ideally accept payments and provide delivery services for your customers through the e-check service. With the two options, you will be providing your customers multiple payment options for transacting with you securely and with confidence. This way, your clients will be able to shop at your business seamlessly, find the exact product that they need (or didn’t know they needed), and complete the payment securely without a hitch.
Difference between Cashless ATMs and PIN Debit
Some processors talk about cashless ATMs and PIN Debits in the same breath, but the two are very different payment options. For the most part, cashless ATMs work the same way as an ATM except that no cash is dispersed. The units are often free standing, and the user who wants to make a purchase swipes their card and choose their amount.
The chosen amounts must be in increments of $5, and the user will have to bear the convenience fee, which could be as much as $6 for using the ATM. Along with this, an “out of network” fee for the transaction might be charged by their bank (typically ranges from $1 to $3) for using the ATM. A chit is then handed to the user for the amount spent at the store. The user will then hand this chit to the cashier at the time of purchase, who hands them any balance for the difference between the amount they pulled out and the amount they actually spent.
Recent models of the Cashless ATMs come in form of a terminal at the cashier, which involves the cashier ringing up the sale, adding the service fee, swiping the customer’s card, and manually entering the sale amount rounded off to the nearest $5 into the terminal. The cashier will then refund the balance to make up for the rounded off amount.
Although cashless ATMs are an option in the cannabis payments industry that seems like it’s being forced to operate on cash alone, it’s not necessarily the best option for your business.
How these Payment Options Facilitate your Hemp Business
One of the most important benefits of utilizing the PIN Debit and e-check services for your hemp business is that it reduces your cash handling. Having less cash at your business premises has a number of benefits, especially in regard to security.
In general, debit transactions have significantly low costs and might actually end up saving you money. Cash can actually be expensive, such as when making large cash deposits. Plus, your cashiers will not have to deal with loads of cash transactions. Instead, the transactions can just be rung up and processed significantly faster, without worrying about making mistakes when making change.
Your customers will also not have to worry whether they have enough cash at hand or the fees they have to pay when making purchases. With Cashless ATMs, your customers will most likely be tapped from both ends as they are hit with a withdrawal fee at one end and a per-transaction processing fee on the other. Using their debit/credit card will mean that the cash is withdrawn directly from their account without additional fees from the bank.
Having a number of payment options is important for both you and your clients. An even if you have put up a cashless ATM on your premises, setting up a transparent and reliable PIN Debit Program will help you keep your business safer, save money, and take you a step closer towards transparent banking. Plus, with these options, there’s really no reason why you can’t accept different forms of payments and sell your hemp products in the same way as other businesses do.