Upcoming years will be abuzz with businesses trying to create a niche for themselves in the market to tackle competition and offer customers some variety. Cannabis industry serves to be the perfect example of this trend.

With cannabis becoming widely accepted gradually, thanks to its legalization in certain parts of the world, the number of new businesses & products entering the market is only set to grow.

According to Forbes, “Cannabis Could be the Most Profitable Ingredient in Skincare,” with the CBD market growing to $170 million in 2017 and poised to reach $1 billion by 2020.

With the industry witnessing upward trajectory despite certain legal & banking restrictions, many alternative payment processors and merchant account providers have come up to offer payment processing solutions that marijuana merchants can take advantage of.

While looking for a merchant account provider, merchants need to be careful and consider a few points before locking in on one. Here are 5 tips when looking for an MMJ Merchant Account:

Ensure Your Processor Understands the Nature and Complexity of the MMJ Industry

With many legal and health concerns surrounding the use of cannabis, marijuana can be considered a complicated & risky business. And so obtaining payment processing for your MMJ business is not an easy task either. You certainly don’t want to end up with a shady processor who has no clue about the workings of your business.

Hence, ensure that your processor has considerable experience working with similar businesses. More importantly, the provider should be up-to-date with industry legalities and provide a quick solution in case of emergency situations wherein legal authorities might try to freeze your account on the basis of suspicious activity.

Apply for a medical marijuana merchant account

Look For a Processor That Offers Variety & Flexibility

Different merchant account providers offer different types of services. Your MMJ merchant account solutions should include a wide range of tools including secure payment gateway, card secure, tokenization, 3D secure, and fraud protection tools to ensure prevention of fraudulent transactions.

Since your business is categorized as high-risk, it is imperative that the processor offers chargeback prevention tools to prevent unwanted fees.

It is also convenient to choose a provider that approves any MMJ related businesses such as CBD products, Hemp oil, cannabis paraphernalia, etc.

Credit Card Processing Rates & Fees

Owing to the difficulties merchants encounter while obtaining MMJ merchant account solutions to take care of their payment processing needs, some providers tend to take advantage of it and charge unfairly high credit card processing fees.

While marijuana is classified as ‘high-risk’ and so your business will have to incur higher fees than the rest, there are processors that will be honest and fair by charging adequate per transaction processing rate and no additional costs.

Ensure that there are no hidden fees involved while signing on the dotted line.

Look For a Reliable & Long-Term Processing Partner That Offers Transparency

Apart from chargebacks & legal difficulties, large monthly processing volumes also make obtaining payment processing for MMJ a complicated task.

MMJ is a lucrative business and therefore will require the provider to process a high amount of volume on a monthly basis. You will find many willing to accept your business at first but will drop you instantly once your business starts to grow.

Always ask your processor how they deal with large processing volumes. Look for a merchant account provider that is transparent, reliable and gives you long term solutions.

Compatibility is the Key

If you are just starting out, always look for MMJ Merchant Account solutions that fit the requirements and demands of your business. You will want a payment processor that offers 24/7 support, technical support and immediate solution to any processing issues.

Believe it or not, Cannabis is one of the hottest industries currently. Whether you are operating a dispensary or any other pot related business, the cannabis industry is set to take off.

According to the Marijuana Business Daily, legal sales of marijuana are expected to grow to more than $20 billion by 2022. The industry is predicted to grow as big as e-commerce. Recent changes in the laws and regulations in certain states, has led to rise in marijuana and related products. It’s no wonder then that the multi-billion dollar industry is also seen as an excellent business opportunity for entrepreneurs.

Yet, the industry faces several difficulties when dealing with financial institutions. Merchants who own and run recreational shops, medical marijuana dispensaries or online stores selling marijuana products face many challenges from federal as well as major banks who refuse to co-operate.

Banking challenges:

Majority of the businesses are forced to accept cash as the only mode of payment with no way to secure credit card processing services or merchant account services. The lack of banks and credit card processors offering merchant services is a serious issue for the cannabis industry.

With cannabis treated as a control substance on the federal level, financial institutions view cannabis merchants as criminals thereby making it difficult for them to obtain any kind of banking services.

Top banks such as J.P. Morgan & Chase and Bank of America have a clear stance and outright refuse to be in any kind of association with the marijuana industry, stating they can produce enough profit by other means. Even though working with such a profitable industry is a huge benefit, the risks that banks have to undertake while providing services to marijuana merchants clearly outweighs the profit.

Consequences of operating a Cash-Only business:

With the world going digital, not only does transacting in cash-only creates operational problems but also leads to security issues. Besides merchant account, processors do not allow merchants to set up a payment processing system either.

With marijuana business netting in thousands and nowhere safe to store it, owners are highly vulnerable to internal theft, robberies, break-ins, and assaults. By being an easy target to criminals, businesses need to employ armed guards for their safety resulting in additional expenses for the owner.

Additionally, businesses also lose significant amount of sales by not offering alternative payment options.

Grey Areas:

Some merchants try to dodge and circumvent around by using merchant account services under false pretenses or hiding vital information from their processor. If caught, this can mean serious consequences for business owners. Your account will be shut frozen or you could be permanently banned from obtaining credit card processing services.

You will find plenty of online merchant account providers willing to accept your business easily and then deceiving you. Unclear laws on transactions as well as legal uncertainties make it difficult to guess who is legitimate or not.

Medical Marijuana/MMJ Merchant Account Solutions:

Whenever you are approaching a potential merchant account provider or are approached by one,

Check if the processor has experience and knowledge working in the cannabis industry &

Be transparent about the type of business you operate or the kind of products sell.

As long as they are in compliance to the law, Marijuana merchants need to be recognized as a legal & legitimate business just like any other regular store as well as have access to merchant account solutions.

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