How Does a CBD Merchant Account Differ from Other Merchant Accounts?

CBD, or cannabidiol, is a compound found in cannabis plants and has gained significant popularity in various sectors, including wellness and beauty. However, selling it is not easy. There are numerous regulatory compliance requirements enforced on CBD businesses – one of them resulting in the need for a special merchant account. Here we will focus exactly on that – what is a CBD merchant account, and how is it different from other merchant accounts? Find it out below!

The Difference Between a CBD Merchant Account and Other Merchant Accounts

A CBD merchant account and a normal merchant account differ on several levels. Let’s take a look at each of them separately.

The Legal Landscape

One of the primary factors distinguishing a CBD merchant account from others is the regulatory environment. CBD products, although legal in many regions, still operate in a legally gray area in others.

As a result, CBD-specific merchant accounts need to comply with the ambiguous legislation – for example, by giving up on functions of normal merchant accounts or having additional ones.

What’s more, CBD merchant accounts are prepared with the changes to such legislation in mind. Therefore, they are often much more flexible, as they need to be adapted to the ever-changing laws and regulations.

Risk Assessment

Due to the fluctuating legal status of CBD, financial institutions often categorize CBD businesses as high-risk. As a result, cannabidiol-selling businesses are usually required to set up special, high-risk merchant accounts.

• higher fees
• higher reserves
• chargeback and fraud protection features

Number of Options

In many cases, e-commerce platforms limit the number of options available for businesses selling CBD products. They might, for instance, make particular merchant accounts obligatory or define the providers. In the end, this means that there is a smaller choice if you need a CBD merchant account than if you need a standard one.

Selecting the Right Provider

Choosing the right provider for a CBD merchant account is crucial, especially considering that you’ve got fewer options than in the other industries. You need to look for providers who are experienced in the CBD industry, comply with the regulatory requirements of the country in which you wish to sell your products, and are accepted by the e-commerce platform that you use.

To make the right choice, you should take a deeper look at these particular features of your potential providers:

• fees and prices
• security
• flexibility
• integration to major e-commerce platforms
• expertise

The best way to do so is by checking the reviews and viewing your competitors. After all, if they are mainly using one or two CBD merchant account providers, then there must be a reason, right?

The Takeaway

A CBD merchant account differs from standard merchant accounts in several ways, mainly due to the unique regulatory and risk environment of the CBD industry. Understanding these differences is crucial for businesses in the CBD sector to ensure they choose the right payment processing partner. With the right merchant account, your CBD business can navigate the complexities of the industry and thrive among its competitors.