What if you were letting profit slip through your fingers and you didn’t even know it?
Right now, it’s a good time to be a CBD merchant. The market for CBD is projected to grow to $47.22 billion by 2028. This growth is primarily due to the growing number of CBD vendors as well as the growing public acceptance of CBD as a product.
If you sell CBD or are planning to, it’s important to know how to keep up with the growing competition. Getting a merchant account for CBD is one of the best ways you can do so.
Still on the fence about getting a merchant account? Keep reading to discover how this can transform your business!
If you’ve been thinking about selling CBD, you’re not alone. In the last four years, the market has really exploded. But what led to this sudden explosion?
It all began back in 2018. This was when a Farm Bill was signed that legalized hemp. Before that, CBD was banned from sale by the Federal Drug Enforcement Administration.
After that, things moved pretty fast. With hemp legal, entrepreneurs rushed to set up successful CBD shops throughout the country. With the Farm Bill in place, everyone felt very confident about their ability to sell hemp.
Soon, though, these vendors ran into a different challenge: most payment processors didn’t want to help anyone sell hemp. To this day, it can be very difficult for a merchant to find a payment processor to help them accept payments for CBD products.
You need a high-risk merchant account for CBD because CBD is considered a high-risk product. However, it is not considered high-risk for the usual reasons.
Typically, businesses are labeled high-risk if they have a strong likelihood of chargebacks or fraud. This could include things like travel-related businesses where customers try to cancel trips at the last minute. It could also include things like subscription-based boxes (such as Loot Crate) where dissatisfied customers are likelier to charge a purchase back.
CBD is a bit different. Typical CBD customers aren’t much likelier to file chargebacks or engage in fraud than the average customer. Instead, CBD is considered high-risk because of its reputation.
Despite the Farm Bill legalizing the sale of hemp, many people still associate it with marijuana. As such, most payment processors don’t want to be associated with selling any product that the public thinks is connected to illegal drugs. On top of that, there are ongoing issues with the FDA.
It’s one thing for a president to legalize something that was previously illegal. It’s another thing for the public to accept that product. And it doesn’t help when there is confusion on the topic from the government itself.
For example, the FDA is always cracking down on vendors selling CBD. It’s not that selling CBD is illegal. But some businesses, knowingly or unknowingly, end up selling products that violate the Federal Food, Drug, and Cosmetic Act. These are the businesses that the FDA ends up cracking down on.
Payment processors, already nervous about the public associating CBD and THC, pay close attention to these crackdowns and become even less willing to provide CBD merchant accounts. The good news is that you can still find a good payment processor to help you grow your business.
CBD may not be considered a high-risk product indefinitely. However, it’s impossible to tell when its status might change.
As we detailed above, CBD is considered risky because payment processors and banks consider selling it a reputational risk. They worry, in part, that they might lose other customers if they help a business sell CBD. However, growing public acceptance of CBD (even among older citizens) means selling it is less of a reputational risk than ever.
The big X factor, though, is the FDA’s stance on the product and those who sell it. In the future, we may see better FDA guidance that leads to CBD no longer being considered high-risk. In the meantime, though, growing your business means researching merchant accounts for CBD and finding the right one for your business.
It can be difficult to find the right merchant account for CBD. But the search is worth it because such an account can help you grow your business in multiple ways.
First, having a merchant account for CBD helps you to accept many different kinds of payments for CBD. Adding this convenience helps you to gain more customers and build your brand. A good payment processor can also help you accept payments online, allowing you to sell to customers all over the country.
Second, if (more like when) you do encounter issues with chargebacks and fraud, a merchant account will help you navigate these issues in no time at all. This allows you to stop dealing with little problems and get back to growing your business.
Third, a merchant account can help you process payments from customers who might traditionally have trouble buying your products. This includes customers with bad credit and/or a history of financial difficulties.
Finally, the right merchant account helps scale to your different needs. Your ultimate goal is to grow your business. Once you find the right payment processor, you’ll have someone who can scale to your needs and help increase your profits in a big way.
Looking for your own CBD merchant account? In that case, Zen Payments provides the solutions you’ve been looking for!
Now you know how a merchant account for CBD can help increase your profits and protect your business. But do you know where you can find a payment processor who can make your business dreams come true?
Here at Zen Payments, we specialize in helping CBD merchants reach their full potential. To see what we can do for you and your business, contact us today!