How to Get Approved for a CBD Merchant Account

Your CBD business is booming and ready to grow. The problem? Every bank and payment processor is labeling you a "high-risk merchant." So, even with a comprehensive business plan, a line of quality CBD products, and the best intentions for your customers, you can't get a merchant account to process payments.

This means you have fewer ways to accept payments, putting those customers who would purchase from your online or brick-and-mortar store in a box you can’t open — and the issues roll on from there.

Fortunately, there are merchant account providers out there who want to help high-risk businesses through these challenges and ensure they get to greener pastures — namely, Adaptiv Payments.

As a solution-oriented merchant account and payment processing service that specializes in high-risk merchants, we know the challenges that come with your space. Whether it's new policies or regulations changing the status of your product, or trends in the CBD industry that suddenly have banks turning away, we've got you covered.

In this blog, we talk about how to get approved for a CBD merchant account and much more. Read on, learn, and let Adaptiv Payment drive your success today.

What a CBD Merchant Account Does For A Business

Generally, a merchant account is a type of bank account that companies use to process and accept credit cards, debit cards, and other forms of electronic payments.

More specifically, a CBD merchant account involves payment processing services that resolve issues common in high-risk markets like CBD products. These factors include ever-changing, complex regulations and a high potential for chargebacks.

By setting up a proper merchant account through a reliable CBD payment processor, your company will be able to simultaneously process transactions while staying compliant with federal laws and industry regulations. This means smoother sales, better customer experiences, and assured business growth.

Why Do CBD Businesses Struggle With Merchant Accounts?

The approval process for merchant accounts is fairly strict for most businesses, but it can be even more complicated for merchants in high-risk industries. The CBD space has its own unique challenges that make it difficult for businesses to get approved for a secure merchant account with or without bank approval. These common problems include:

• Marijuana-related Stigma: Products with less than 0.3% THC derived from hemp may be legal according to federal law, but businesses selling them are still considered related to the sale of illegal substances like marijuana in the eyes of the public. This makes financial institutions wary of the industry, which can cause most CBD businesses to have a tougher time obtaining valid merchant accounts.
• Federal vs. State Laws: While the 2018 Farm Bill legalizes hemp and its derivatives, like CBD, individual state policies differ from the federal ruling. That makes CBD regulations even more complicated, causing financial institutions to be uncertain about investing and consequently stricter with merchant account approvals.
• Chargeback Risks: Due to its lack of regulation at this time, customers in the CBD industry may experience issues with product and service quality, resulting in a potentially high rate of chargebacks and disputed transactions. This heightened risk is another strong reason why CBD companies have a hard time getting merchant account approval.

These are just a few of the hurdles that make it difficult to obtain stable and secure CBD payment processing from major merchant account providers.

Fortunately, CBD merchant account providers like Adaptiv Payments can help. We specialize in high-risk markets and provide bespoke solutions tailored to ensure your business enjoys secure payments and seamless growth. Interested? Get started with Adaptiv today and apply for your CBD merchant account.

The Answer: How to Get Approved for A CBD Merchant Account

Finally, let's get to the main topic: how to get approved for a CBD merchant account so your business can take payments of all kinds and earn revenue quickly. Below are some essential steps your CBD business should take to ensure you get approval for merchant services — and not just from any provider, but one that will work with you through thick and thin. Here's what you can do:

1) Find & Choose a High-Risk Payment Processor

First and foremost, do some research and search for a payment processor that specializes in providing high-risk merchant accounts to companies in challenging and evolving industries, like CBD.

Ideally, you want to look for a merchant account provider with a positive track record of working with CBD merchants.

Check their websites to see the full range of services they provide, but also analyze previous customer reviews to see what other companies say about their service quality. Look for a company that:

• Provides tailored payment solutions
• Has broad experience in partnering with high-risk industries
• Keeps up-to-date with regulations and laws for high-risk and niche markets
• Has a good record of service and communication with partners (i.e., never freezes funds without notice, always available to contact, etc.)

2) Arrange Your Business Documents

Before applying to any merchant service providers you've found, you first need to put together a set of documents that prove your business is legitimate and compliant with state and federal laws and regulations. Some documents you should have include:

• Your business license and registrations
• Your Employer Identification Number (EIN)
• Details of the business's owner(s)
• Your business's financial statements for the last three to six months
• Tax returns
• Proof of address
• Government issued IDs of all business owners
• A voided check or official bank letter for your business account

Although these are some key documents, there are others that your potential merchant account provider may ask for. Make sure to collect and submit all requested information, and make certain it is all honest and accurate.

Any misrepresentation of your business and its products is an express ticket to losing your account. As the old saying goes, "Honesty is the best policy," especially when your company is already in a high-risk market like CBD.

3) Create a Good Track Record of Compliance

Before applying to a processor, you need to gather the right documentation and ensure your company closely follows important legal and industry standards.

One vital way is to ensure your products are tested and certified by an ISO-accredited third-party lab or organization.

Because most CBD products haven't been FDA-approved, this is incredibly important. In particular, you must ensure you verify that your CBD products are derived from hemp and contain no more than 0.3% THC in order to avoid legal issues.

Additionally, you should make sure your website is fully functional, follows all current security standards, and uses a secure payment gateway.

It is also important that your site includes legally required pages, including a terms and conditions page, a privacy policy page, a refunds and returns policy page, customer service contact information, and a physical business address.

Also, double-check to avoid potentially misleading or false information regarding medical or health claims for your products. If found to be untrue, these can lead to denial.

4) Understand Account Terms & Conditions

As your chosen high-risk processor reviews your application, remember that your account may come with certain conditions. These are to protect them and the banks they work with from the potential risks in working with your business. A reliable payment processor will more than likely be lenient, but some may not be. Here's what you should expect and what you should look out for:

• Transparent fees and pricing: The best processors clearly show you their transaction fees, chargeback fees, service costs, and so on, all at the beginning or at the end of the application process. The more upfront, the better.
• Higher Than Average Fees: Because of your CBD company's high-risk status, expect that the processors you apply to will offer higher transaction rates than those they would give to lower-risk businesses.
• Mitigating Risk Through Reserves: Some processors may even require that your account include rolling reserves. This is when the account provider holds a small percentage of your sales in reserve in case of possible risk of chargebacks from your business.

Enjoy a Stable Growth in CBD Sales With Adaptiv Payments.

So, the overall steps to getting approved for a CBD merchant account are simple: Submit accurate and honest information about your business. Stay compliant with all applicable laws and industry regulations. Be prepared for challenging account terms.

Most importantly, choose a great high-risk merchant account provider with a great track record of customer service and technical expertise. That sure sounds a lot like Adaptiv Payments.

With nearly a decade of experience in high-risk markets like the CBD space, Adaptiv knows the challenges and solutions to ensuring your business maintains smooth CBD credit card processing. We'll make sure your business stays compliant with all major laws and security standards.