Products containing CBD used for medicinal propose were officially recognized as a ‘medicine’ by the Medicines and Healthcare products Regulatory Agency (MHRA) in 2016.
And as of last year the use of CBD oil has been made 100% legal in the UK for medicinal purpose only.
CBD stands for cannabidiol, one of many cannabinoids found in the cannabis plant. CBD tests have shown medicinal properties and health benefits like helping reduce seizures in cases of epilepsy, help with anxiety, treat chronic pain and act as an anti-inflammatory.
While some are still apprehensive about using it, CBD oil usage has seen an impressive increase since being legalized with more and more people being aware of the medicinal advantages it offers.
The effects of its slow yet steadily increasing popularity can be seen online with a large number of businesses selling CBD oil and related products. There are also a few key food health stores selling CBD oil products to customers.
Why the CBD Oil Industry is considered High-Risk?
The expression, Cash is king, rings the most true with Cannabis industry.
Despite the selling of CBD oil being made a completely legal business, the merchants are still forced to deal in cash due to the constant security threat and industry stigma. Banks and payment processors are highly wary of undertaking such businesses on board, understandably due to the huge risks involved.
- CBD oil is extracted from cannabis and tied to marijuana which makes it a high risk industry. And similar to other high risk businesses, processors rarely accept applications of CBD merchants.
- Many of these financial institutions have little idea how the industry functions because it’s relatively new.
- In spite of the various proven health benefits broadcasted by CBD oil consumption, there are also side-effects to it. The controversial nature of selling CBD oil has led banks and processors to shy away from the industry.
- Banks are afraid of reputation damage caused by taking on such businesses.
- There are huge risks and too many legal hurdles to cross in terms of CBD businesses.
CBD oil Merchant Account Processing
With the many uncertainties and reservations surrounding the industry, CBD merchants can still find willing merchant account providers offering CBD industry-specific merchant account solutions.
Basic essentials required to open a CBD Merchant Account:
- A legally compliant business
- Positive & Long credit processing history
- Healthy rolling reserves
- High monthly volume
- Low chargeback ratio
The key to finding the right merchant account provider is to find one who provides industry-specific merchant solutions. In the case of CBD merchants, a High Risk merchant account provider specializing in CBD merchant accounts would prove to be an apt fit.
A merchant account provider having significant experience in this industry will be aware of the workings and risks involved with the business offering services deemed fit for your business. Such processors will also help a merchant mitigate and lower risks by offering tools for the same.
A secure payment gateway is imperative with majority of CBD products sold online. Look for processors that integrate payment gateways with merchant accounts. There are plenty of reputable merchant account providers offering both, IBS being among one of the top-rated processors. Since CBD merchants deal with high risk products, a payment gateway that is PCI compliant is of paramount importance.
Securing a High Risk Merchant Account for CBD oil and related products is made easier with the right processors!