Square CBD Requirements and Payment Processing Restrictions

Square CBD for Merchant Processing

If you have an online CBD business, you have likely considered using Square CBD for your merchant processing. Many business owners immediately default to the major payment processors when searching for CBD payment processing solutions. It's understandably common. However, they miss out on specialized CBD merchant accounts that offer more sustainable, long-term options from high-risk credit card processors.

Obtaining a Square CBD merchant account can be tricky if you do not know the particular details of the industry. In some cases, your CBD business may qualify for a standard account. But in many circumstances, the legalities and restrictions of selling CBD products and tinctures online can be an obstacle.

Square Merchant Account – Is It Sustainable For Your CBD Payment Processing Needs?

Presently Square is beta-testing their CBD merchant account solution. Only they know how long the beta will last, but it may not be suitable for merchants in the future who want sustainable solutions. Nonetheless, if you want to build your business on certainty, you may want to look for a high-risk company like PayKings that can fully support your products. Make sure you have COAs that show at a THC level beneath 0.3%.

Luckily, there are several tools available to sellers to start, run, and grow an online CBD business. In this article, we will break down the ins and outs of the hemp and e-commerce space and compare that information to the Square CBD program.

Square CBD Payment Processing for CBD Businesses

On the surface, the Square CBD program for businesses seems to have competitive payment processing rates. They offer custom pricing packages for larger CBD businesses depending on the sales volume and average transaction size.

Square Payment Processing Alternatives For Your CBD Business

As you can see, these rates are significantly higher than the rates advertised for lower-risk industries. This is because CBD, hemp, and cannabis-related products fall under the categorization of "high-risk." Acquiring banks have determined that certain industries are at higher risk due to the chance of high chargebacks, regulations, or even reputational risk, to name a few.

As a result, high-risk businesses such as online CBD shops have a more difficult time obtaining merchant accounts. Luckily, there are payment processors like PayKings that specialize in providing high-risk merchant accounts for CBD businesses and provide CBD business owners with the support they need.

However, if you prefer to explore your options with Square, there is more to consider regarding long-term payment processing solutions.

Square CBD Payment Processing Features

If you want to accept payments with Square, CBD merchants should consider the payment processor's features. They offer payment terminals for in-person or card-present transactions.

Payment processing solutions for when you sell CBD products have to meet certain regulations. The Farm Bill noted that THC content should be less than 0.3 percent in products. This is consistent with regulations specific to hemp-derived products in the industry. Measures such as these are in place to distance the CBD from its cannabis counterpart. However, as CBD payment processing progresses, online cannabis merchant accounts become more accessible.

Cannabis Merchant Solutions

Selling cannabis online can still be challenging in some states, but obtaining cannabis merchant solutions for certain types of businesses can be straightforward, depending on the tier they fall into.

Tier 2 Cannabis Merchant Accounts:

These accounts are for companies that supply products or services directly to cannabis businesses. Examples include packaging suppliers, testing labs, or marketing agencies that work with cannabis companies. Because these businesses are closely linked to the cannabis industry, they are classified as higher risk but are still relatively straightforward to approve.

Tier 3 Cannabis Merchant Accounts:

Tier 3 accounts involve businesses that are only indirectly connected to the cannabis industry. These might include companies selling tangentially related products, such as a clothing brand that features cannabis-themed designs. Tier 3 accounts are typically easier to get approved since the connection to cannabis is more distant.

Finding Reliable CBD Payment Processors

While Square CBD offers a convenient option for CBD business owners, its limitations, especially in a rapidly evolving industry, may not provide the stability your CBD business needs for long-term success. High-risk merchant account providers that specialize in CBD offer more tailored solutions, greater reliability, and expert support to navigate the complexities of the CBD market, ensuring compliance and minimizing the risk of account disruptions.

Choosing a high-risk merchant account provider over Square CBD can better align with your business goals, offering the specialized attention and stability necessary for sustained growth. By opting for a provider that understands the unique challenges of the CBD industry, you can make a more informed decision that supports your business’s future success.