What to Know Before Getting Started
Cannabis Is Still Illegal… For Now
The currently murky legal status of medical and recreational marijuana dispensaries has led Visa, MasterCard, Discover, and American Express to forbid marijuana payment processing on their networks, leaving merchants without access to credit card processing for medical marijuana. Until this matter is resolved at the federal level, it appears that the major credit card processors will not openly provide merchant services for marijuana dispensaries. This policy has forced most marijuana vendors to exclusively accept cash transactions, limiting payment options for dispensaries and turning their customers and their cash-only locations into targets for robbery.
The State Of Marijuana Banking
As of March 2019, momentum toward legal marijuana banking appears to be gaining in the U.S. House of Representatives. The Secure and Fair Enforcement (SAFE) Banking Act, a bill intended to protect financial institutions that provide services to marijuana businesses, has been passed out of committee and is expected to be scheduled for a house vote within weeks. The bill has the support of the American Bankers Association and would lay the foundation for further legalization efforts by providing a safe way for dispensaries and CBD/hemp vendors to accept electronic payments. A more ambitious proposal for total legalization titled the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act has previously received support from President Trump and may be introduced later this year.
Current Marijuana Payment Processing Options
Some high risk credit card processing specialists have started to offer workarounds that enable merchants to accept credit cards through domestic merchant accounts. We have listed the top providers of marijuana merchant accounts below. Given the firm stance of the major banks, it is probable that these companies are using solutions that rely on loopholes or procedural gray areas in order to process cannabis payments. It is also reasonable to assume that all of these providers offer point of banking systems as an alternative method of card acceptance for marijuana vendors. However, the providers themselves will have more up-to-date information on the marijuana merchant services they provide.
Some marijuana merchant account providers have found workarounds that do not rely on major credit card processors. Marijuana credit card processing is typically made possible by a service called a point of banking system. This system, also known as a “cashless ATM,” functions in the store as a PIN-based swiped transaction, but the actual processing of the payment is completely different from traditional credit card processing.
When a customer swipes a credit, debit, or ATM card through a point of banking terminal, the terminal essentially acts as an ATM that the customer might find at his or her bank. The only difference is that no physical cash is ever withdrawn from the customer’s account. Instead, the customer must enter a PIN, choose a type of transaction (in this case a withdrawal), and specify the dollar amount being withdrawn. Just as with ATMs, these dollar amounts are in increments of five dollars ($10, $15, $25, etc.). The terminal then prints a receipt for the customer to sign, and the merchant places a copy of that receipt in the register before providing the customer with change to make up the difference. For example, a cashier in a dispensary would hand back $3.20 in cash for a $16.80 purchase made by a customer who selected a $20 withdrawal. This greatly reduces the amount of cash on site, and the swiped payment is deposited in the merchant’s bank account usually within three days.
Generally speaking, marijuana merchant services providers encourage merchants to charge a convenience fee (usually about $0.99) on each transaction to cover the cost of the terminal/processing service. This fee comes at the customer’s expense, so merchants should weigh a customer’s potential irritation with a surcharge against the convenience of offering card payments.
Please note that CardPaymentOptions.com has not assessed the legality of the payment methods offered by the following providers. This list is simply a resource for medical and recreational marijuana vendors who are seeking credit card processors that claim to process sales for the marijuana industry. Merchants are strongly encouraged to research the services offered by these providers before agreeing to process card payments for cannabis through them.
Our unbiased articles are supported in part by helping you find highly reviewed merchant accounts. You can learn more here.
Why These Merchant Account Providers
High Risk Specialists
eMerchantBroker is a Los Angeles, California-based company that offers high risk e-commerce processing solutions including medical marijuana merchant accounts. The company’s products include credit card processing, ACH processing, an online payment gateway, merchant cash advance, and a chargeback management system to help merchants dispute and resolve chargeback claims. eMerchantBroker’s medical marijuana merchant account enables legally operating dispensaries to accept PIN debit payments and e-wallet payments on site. CBD and medical marijuana are established specialty areas for eMerchantBroker, although CBD payment processing is currently only available through an offshore bank.
eMerchantBroker offers custom pricing for each merchant and maintains a low complaint rate relative to its size and merchant portfolio. Our review of eMerchantBroker gives the company an “A” rating overall and the BBB assigns the company a rating of “A+.”
Other Merchant Account Options
The providers in this section may not have been researched as thoroughly or may lack a quality that prevented them from being listed above. We have listed them here to provide a broader view of potential merchant account options. Are you a decision maker with your company and believe that you should be listed below? Tell us here.
The Transaction Group
The Transaction Group is a Jacksonville Beach, Florida-based ISO of PowerPay that claims to have “partners that offer legal marijuana merchant accounts for medical marijuana dispensaries in the United States.” Whether or not these partners are PowerPay and its processor is unclear at this time. The company’s website stipulates that medical marijuana vendors must be retail locations only (no eCommerce or MOTO transactions allowed) and does not mention point of banking systems.
Whether The Transaction Group offers traditional credit card processing for medical marijuana is currently unknown, so merchants are advised to fully inquire as to the legality of any services they receive. The Transaction Group is currently showing no rating with the Better Business Bureau (BBB) and does not have any complaints filed within the last three years.
Leap Payments is an Aguora Hills, California-based merchant account provider that can serve standard-risk or high-risk merchant types. The company claims to offer “the ability to accept credit and debit card transactions” for both retail and e-commerce marijuana dispensaries. The company’s general merchant services include point-of-sale systems, mobile credit card processing, an online payment gateway, and gift and loyalty programs, but it’s unclear whether these services are available to MMJ merchants.
Founded in 2015, Naturepay is an Anchorage, Alaska-based merchant account provider dedicated specifically to processing payments for marijuana dispensaries. The company claims that it can provide a domestic merchant account and banking solution for medical marijuana merchants as well as POS equipment, an online payment gateway, gift and loyalty programs, ATM placement, and cash management and security. Naturepay can also serve CBD and paraphernalia businesses.
Naturepay advertises a per-transaction fee of 5.95% plus $0.30 and may also operate under the name “Weed Pay LLC.” It currently has an “A” rating on CPO and does not have a profile with the BBB.
MMJ Card Processing
Also known as “420 Credit Card Processing” and “Strategic Merchant Partners,” MMJ Card Processing is a California-based merchant account provider that claims to offer domestic merchant accounts for marijuana dispensaries. The company’s website specifically states that its merchants can accept Visa, MasterCard, Discover, and American Express credit cards and receive those funds in a U.S. business bank account.
Founded in early 2018, iFund420 is a cannabis-focused merchant account provider based in Scottsdale, Arizona. The company claims that it is partnered with multiple domestic banks to enable marijuana retailers to accept debit and credit cards. It also states that it can serve CBD and paraphernalia sellers.
iFund420 requires merchants to sign a non-disclosure agreement before inquiring about its marijuana merchant account services. It currently does not have a rating with CPO and does not have a profile with the BBB.
If your business offers merchant accounts and payment solutions to medical marijuana dispensaries, please leave a comment in the comment section below or contact us through our contact page in order to get listed in this article.