The 6 Best Cannabis Credit Card Processing Companies For Marijuana Dispensaries

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The marijuana business is one of the fastest-growing industries in the United States. In 2020 It Reported $17.5 billion in legal sales, a drastic increase from the previous year.

While this growth translates into more business for credit card processing companies, cannabis credit card processing remains a big hurdle for many marijuana operators.

Luckily a few companies have been established with the sole purpose of helping them process credit card payments. Before we look at them, we explain why cannabis payment processing is challenging.

Why Credit card processing is difficult for marijuana operators

The primary reason for the challenging credit card payment processing for cannabis merchant accounts is the apparent mismatch between Federal and state laws.

Federal law prohibits the possession, use, and distribution of marijuana products. Conversely, state laws vary considerably regarding cannabis use and sales.

What’s more, the FDA still lists cannabis products (containing 0.3% or more of Tetrahydrocannabinol) as Schedule 1 drugs. Drugs listed under this category are illegal except when used for research.

While these laws don’t constrain credit card processing companies, they have adopted policies prohibiting cannabis payment processing.

Some companies circumvent this challenge by routing payments to offshore processing accounts only to get slapped with chargebacks.  Other operators misrepresent cannabis products citing they are dealing in other merchant goods. 

Such tricks only get their businesses closed down quickly. Luckily a few credit card processing companies have been established to solve this problem. They include:

Shift Processing

Shift Processing logo

Shift uses a Peer-to-Peer Network to enable customers to purchase marijuana products using credit cards. Shift Processing uses the same model as PayPal and Venmo as it doesn’t deal with the cannabis merchants directly. 

Instead, the customer uses the platform to purchase goods from cannabis merchants discreetly at a small fee. This payment model is unique because Shift uses Automated Clearing House (ACH) to process transactions.

ACH allows customers to transfer money between banks without checks, cards, or wire transfers. Since they are electronic transfers, merchants can verify receipt of funds almost instantly. 

The only downside of Shift Processing is that it doesn’t support eCommerce sales. Only customers picking up orders or making in-person purchases can use this platform. Also, its zero-processing fee claim isn’t entirely true. The processing fee is nearly 6%, and the cash discounts cannot exceed 4%.

Pros

Cons

eMerchant Broker (EMB)

E Merchant Broker Logo
It’s the most popular high-risk credit processing company for marijuana products, gaming, e-cig, adult entertainment, and dozens of other industries. Apart from marijuana payment processing, EMB protects merchant accounts from chargebacks through its partnership with Ethoca and Verifi.

What’s more, it processes payments made via checks, credit, and debit cards. And if buying marijuana products from an online dispensary, you’re in luck. EMB accepts online payments, too, thanks to its proprietary payment gateway.

What stands out about this company is its reliable customer support and ability to support a vast range of cannabis products.

Whether your business sells CBD supplements, CBD oil, edibles, topical treatments, or creams, you can count on EMB to process your credit card payments. However, like other cannabis payment processing companies, it doesn’t disclose its rates.

It uses tiered pricing to charge for services, and many customers cite it’s more expensive than most cannabis processors’ flat-rate pricing. In addition, customers using EMB services must commit to a long-term contract, and in case you want to terminate it mid-way, you’re liable to a hefty cancellation fee.

Pros

Cons

PaymentCloud

Paymentcloud logo

It’s another company offering Payment processing solutions but only for Marijuana related businesses and other high-risk categories like tobacco, topical CBD hemp, vapes, firearms, and nutraceuticals.

The company adopts a hands-on approach when working with clients. It walks you through the application process and helps you find the lowest rate using multiple backend processors.

Once you’re onboard, PaymentCloud continues to offer dedicated support. However, we noted that its customer support is difficult to get in touch with because they are available on two platforms only (email and telephone) from 7 a.m.- 6 p.m. Some features that stood out about Payment Cloud include:

Chargeback prevention: PaymentCloud, in partnership with a few companies, ensures clients get instant dispute alerts, track disputes and prevent chargebacks.

Supports online payments: The company has payment gateways that support online payments.

Fraud prevention: PaymentCloud uses Industry-standard Address Verification System technology, 3D secure technology, and tokenization to verify the cardholder’s information at the point of purchase. In addition, they may halt suspicious payments temporarily until they’re verified.

Payment types: The company processes payments made through debit and credit cards, automated clearing house payments, and in-person payments made using mobile apps, POS systems, and credit card terminals

Like other high-risk businesses, the company doesn’t disclose its standard processing rates; instead, it uses a quote-based pricing system. A flat rate applies for processing payments and a recurring incidental fee. 

Pros

Cons

SMB Global

SMB Global logo
This payment processor is suitable for high-risk businesses and marijuana dispensaries that have set up offshore merchant accounts. It has two payment gateways (Authorize.Net and NMI payment gateways) integrated with all available shopping carts.

Note that SMB Global isn’t a direct processor; instead, it works with other processing companies and banks to set up an account that meets your needs. Then, once you apply to use their services, it sends your application to other processing partners to find the best contract terms.

What’s more, SMB processes payments made via mobile services using its proprietary mobile processing system called Mobile SDK. Other features that stand out about SMB Global include:

ACH payment processing: This option is ideal for businesses that want to eliminate the need for wire transfers and paper checks. It’s cheaper than credit card processing. 

Credit card terminals: The company also offers one free mobile card reader for every account. Once you close the account, you must return the equipment.

Offshore merchant accounts: SMB Global also provides offshore accounts for customers who purchase marijuana products in different currencies. The underwriting process for offshore accounts is a little relaxed and doesn’t include cross-border fees imposed by most credit card associations.

Integration with online shopping carts: Once you create an account with SMB Global, you get to integrate your website with more than 175 online shopping carts 

Chargeback protection: This is one of the best features, especially for a company that deals with offshore merchant accounts. SMB Global uses a suite of automated tools to monitor, prevent, respond to chargebacks

Pros

Cons

Instabill

instabill logo
If you’re big on transparency, Instabill is the go-to company. Unlike the other payment processing companies we’ve reviewed, Instabill displays its rates for all and sundry to see.

Once you visit its website, you’ll find detailed disclosures about the rates as well as the payment options available for both medical and recreational marijuana sales.

There are no standard rates. Instead, the rates vary based on processing volume, business type, and risk level.

As such, merchants operating high-risk accounts pay higher rates than those operating low-risk accounts. However, Instabill provides discounts for businesses with good processing history with the company. 

What’s more, the company processes payments for international customers. This means U.S.-based marijuana dispensaries don’t have to avoid foreign customers.

As if that’s not enough, Instabill deals with other high-risk businesses, including online gambling sites and India-based tech support companies.

Apart from standard credit card processing, the company provides ACH processing too. We found the processing rates pretty affordable as no interchange rates apply as in credit card transactions. The only downside is that it offers two payment options only: 

  • Debit payments: For customers making ACH payments
  • Cryptocurrency: For those paying using Bitcoin or other digital currency 

Another feature that stands out about Instabill is that it processes mobile payments. Unfortunately, it doesn’t have a proprietary mobile processing platform, but it recently established a partnership with CardFlight to provide this solution.

Pros

Cons

Paybotic

Designed specifically to deal with payments in the cannabis industry, Paybotic handles electronic payments for cannabis-based businesses of all sizes. They’ve been doing this for ten years, so they have a track record of reliability in a market that is otherwise unstable.

Unique payment method: rather than charge you a processing fee for every single transaction, Paybotic instead charges a single setup fee and then a monthly retainer. Depending on how much business you do, this could definitely save you money in the long run.

Gift cards: They’ll also help you set up a gift card system if you’d rather have that than debit cards. These gift cards follow state and federal regulations. In some ways, this is safer than other payment forms as there is no direct purchasing of marijuana via credit or debit cards.

Quick set up: They also will get you up and running in no time. Within one to two business days, Paybotic will have your system approved, installed, and ready to go.

They also offer:

  • Electronic check/ACH processing
  • Loyalty programs
  • Merchant cash advances
  • Cannabis and hemp insurance

Pros

Cons

What to Consider When Looking for Cannabis Credit Card Processing Company

Legitimacy

The problem with marijuana operators is that they don’t have a problem skirting legal guidelines. While it seems acceptable, the legal implications of violating these laws can be detrimental to both marijuana operators and credit card processing companies. 

Your business may be closed down and accounts frozen whether you knew the credit card processing company operated illegally or not. Therefore, it’s essential to ensure the company has the required permits to provide credit card processing services.

Accept Cannabis Dispensaries

Marijuana businesses are one of the many high-risk companies that need credit card processing. However, since not all companies offer these services to marijuana operators and dispensaries, it’s essential to verify this fact from the onset.

Fair Pricing 

The marijuana business is a high-risk business, hence likely to attract high rates. On average most providers charge 6% and 0.30 for each transaction. These rates eat into a business’s profits, especially when a credit card processing company charges a rolling reserve.

It’s essential to ask for a detailed overview of the cost of processing credit card payments right off the bat. Alternatively, look for providers who have month-to-month agreements instead of one long-term contract.

Customer Service

The provider should be accessible 24/7. The marijuana business is a pretty sensitive trade bound to experience legal problems at any time. Therefore, it’s best to avoid dealing with companies with a bad reputation in this field.

With companies like Elavon withdrawing from cannabis credit card processing services, this market remains murky for many marijuana operators. However, these six companies show that cannabis operators can still accept credit and debit card payments.

The trick is to look for a provider that charges fair rates, can work with marijuana dispensaries, protects your accounts from a chargeback, among other features. Proposed legislation like More Act and SAFE Banking Act would change the situation, but marijuana operators can only use the available options until then.

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Quick Recap: 6 Best Merchant Accounts For Cannabis Credit Card Processing

Efrain Sanchez

Efrain Sanchez

Efrain Is the founder and current CEO of Growth Logiq, he brings years of experience working with almost every business vertical imaginable with everything between from small bootstrapped startups to large Fortune 100 companies in both sales and managerial SEO/SEM roles. Growth Logiq specializes in highly competitive markets including Cannabis SEO , Medical, and D2C Consumer products. He previously worked for a large Fortune 500 where he helped thousands of businesses secure their online presence. Efrain lives in Phoenix AZ with his kitten. You can find him on Linkedin