Traditional Payment Processors and CBD Merchants
Traditional payment processors can significantly impact CBD merchants. While processors like PayPal, Stripe, and Square are well-known for traditional services, they may not be suitable for high-risk industries like CBD.
PayPal CBD and Policy Violations
CBD merchants often unknowingly put their business at risk when using traditional processing. Many traditional processors ban the sale of CBD, and policy violations can result in frozen accounts and inaccessible funds.
High-Risk Classification for CBD
CBD merchants are classified as high-risk due to the industry's evolving regulations. Since the legalization of CBD sales in 2018, many factors continue to change, making CBD sales riskier than average products.
PayPal's CBD Policies
PayPal's CBD policy is straightforward: they avoid high-risk accounts. PayPal caters to low-risk industries and does not accept or facilitate CBD payments. Their policy explicitly states that products containing Cannabidiol may not be sold using their platform.
Stripe's CBD Policies
Stripe's CBD policy is similar to other traditional payment processors. High-risk industries, including CBD products, are restricted from using their platform. Stripe's zero-tolerance policy means that merchants discovered selling CBD could have their accounts frozen.
Stripe uses machine learning through Radar to evaluate payment risks in real-time. While this can protect merchants from fraud, it also means that high-risk merchants are continually being evaluated and may face account reviews or temporary freezes.
Square's CBD Policies
Square has recently changed its CBD policy, launching an early-access CBD program for high-risk merchants. This limited trial allows CBD sales on Square's platform for various transaction types. However, merchants must undergo intensive screening, and the program is still in its trial phase.
Square's traditional payment processing platform still does not support high-risk industries outside of this program.
High-Risk Merchant Accounts for CBD Businesses
As a CBD merchant, it's crucial to understand payment processing in your industry. Traditional platforms like PayPal, Stripe, or Square may not fit a high-risk merchant's needs.
Consider establishing a high-risk merchant account with a specialized provider who understands the CBD industry's unique requirements. This approach can offer:
Expertise in CBD industry regulations
Tailored high-risk payment processing solutions
Acceptance of more payment types
Reduced risk of account freezes or closures
By choosing a high-risk merchant account provider, CBD businesses can set themselves up for success and avoid the pitfalls associated with using traditional payment processors not equipped to handle their specific needs.