Credit Card Processing

Choosing the Best Dispensary Credit Card Processing

May 3, 2023

In the cannabis industry, cash has always been king. Most cannabis businesses only accept cash payments. In fact, some even have an in-store ATM. This way, customers can withdraw money to pay for their purchases conveniently. However, we are soon to become a cashless society, and no one likes paying extra for transaction fees.

Statistics show that Americans prefer cashless transactions. Based on Travis Credit Union’s survey in 2020, only 16% of the respondents always carried cash. And they only had an average amount of $46 in their wallet. Most consumers nowadays prefer using credit or debit cards to pay for purchases.

So, why can’t your cannabis dispensary accept credit and debit cards? Unlike other industries, things are not so simple when it comes to cannabis. As a retailer in the cannabis industry, you need to be aware of all the cannabis payment processing solutions in the market. You also need to know how these can affect your dispensary.

This guide will show how federal and state laws affect credit card payment processing. It will include information on other payment solutions available in the cannabis industry.


Also, it will teach you how to choose the best dispensary credit card processing company. Moreover, it’ll introduce the newest payment processing solution in the industry – Crypto.

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Why Can’t Cannabis Businesses Accept Credit Card Payments?

Marijuana is legal in many states, making it possible for dispensaries to run in the first place. But the Food and Drug Administration (FDA) still considers it a Schedule 1 drug. This means that it is an illegal substance according to federal law.

No federal law bars major credit card companies from accepting cannabis transactions. But it is the federal government that regulates these organizations. Banks are also institutions regulated by the federal government.

This means that banks and credit card companies must follow federal law and guidelines. Moreover, these companies are risk-averse. Many merchant services providers fear getting penalized if they provide cannabis dispensaries with a merchant account. They may even get prosecuted if they process cannabis payments.

What about the SAFE Banking Act? The Secure and Fair Enforcement (SAFE) Banking Act was introduced in 2019. This bill bars regulators from punishing banks if they provide financial services to marijuana-related businesses. While promising, the Senate has yet to approve this bill.


The Problems With Cash for Cannabis Businesses

Keeping your cannabis sales to “cash only” comes with many concerns. It will prevent you from upselling other products to your customers as their purchase is limited by the amount of cash they have. An in-store ATM may solve this issue but raises other problems, such as floor space and transaction fees.

Human Error

There’s a high risk of human error when dealing with cash. Mistakes can be made when counting money and giving change. Cashing out at the end of the day can get overwhelming since cannabis dispensaries have many daily transactions. Any discrepancies will be hard to catch. But with credit card payments, accurately tracking your revenue won’t be an issue.

Risk of Theft

Cannabis merchants have to worry about the risk of theft. Before depositing their earnings in their bank account, they risk the money getting stolen. It’s not just internal theft that they need to be wary of, as many cannabis retailers have been victims of armed robberies.

eCommerce and Deliveries

Cannabis merchants who want to sell online will need to risk their delivery driver carrying large amounts of cash because they can’t accept online payments. This not only endangers your revenue but your driver, too.

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Current Cannabis Payment Processing Methods

The good news is that you don’t always have to limit your sales to cash payments. To boost your sales, you can offer other options to your customers, such as credit card payments.

Point of Banking (POB)

Point of banking is also known as a cashless ATM, and there’s a reason for that. POB is like withdrawing cash from an ATM with your debit card, except this payment method is done at the point of sale.


Let’s give you an example. A customer walks in, wanting to buy $37 worth of cannabis products. He will insert, swipe, or tap his debit card on a modified credit card terminal. Then, he will enter the amount of the sale and his PIN.

Payments using a cashless ATM are in increments of $5. You must round up the customer’s payment to the nearest $5. In this case, the amount is $40. Once approved, you will give the customer his change, which is $3. Sometimes, customers leave the change as a tip.

The entire transaction is like a cash withdrawal without actually getting the cash. Note that the cannabis payment processor will charge your customer a convenience fee separate from the rounded total you entered into the machine. Some providers will give part of the processing fee to the cannabis business as a rebate.

ACH Payments

Another payment option for cannabis businesses is ACH transfers. ACH stands for Automated Clearing House, the network that processes these transactions. This payment method involves the transfer of funds between bank accounts electronically. Electronic funds transfers are secure and legal, as well as easy to put in place.

Most people use ACH transfers to pay their bills online. Some use this option to pay their employees. Some use ACH transfers to deposit money into their individual retirement accounts (IRA). ACH payments allow you to transfer payments from your customer’s bank account to yours.

It is one of the most secure payment methods in the cannabis industry, allowing you to accept mobile payments. To do this, you will need to partner with a third-party ACH payment solution. Moreover, your customers will also need to sign up for this system to make payments.

PIN Debit Card Payments

This payment option allows you to accept debit card payments from your customers. Like a cashless ATM, your customer will use his debit card on your card terminal when checking out. He will also need to enter his PIN to allow the payment. But with PIN Debit, you only need to charge the exact amount.

Customers are charged a processing fee, but the amount will depend on the debit card network and the payment processor. The main benefit of accepting PIN debit card payments is how quickly you receive the payment in your merchant account, with an average turnaround time of 24 hours.

image of what to connsider when choosing the best dispensary credit card processing company

What to Consider When Choosing the Best Dispensary Credit Card Processing Company

Cannabis retailers can earn a lot but still lose potential cannabis sales because of the limited banking and payment processing options. Being able to accept credit cards will make both retailers and customers happy. The question is, how do you find a suitable provider for cannabis payment processing?

There are several factors to consider when looking for the best dispensary credit card processing provider. The first and most important factor is reliability.

The annual U.S. sales in the cannabis industry have the potential to reach $45.8 billion by 2025. So, many retailers want to be able to expand and accept credit cards. This is also why the number of cannabis payment processing companies has risen.

Unfortunately, only some of these payment processors are legit. Some use workarounds that are considered fraudulent, which could lead to the credit card company suspending your merchant account. Worse, the state could get involved. So, it’s best to look for a trustworthy and reliable provider.

When you do your research, make sure you check the provider’s list of previous and current clients. Find out if the payment processor has had complaints from other cannabis businesses. Read the feedback provided by customers to determine the strengths and weaknesses of the provider.

Also, take the time to learn how they go about cannabis payment processing. Avoid providers that offer offshore merchant accounts. Look at the features and tools provided by the company and see how these can benefit your business.

Lastly, review the provider’s processing fees. The best dispensary credit card processing providers don’t come cheap, but the additional expense will be worth it in the long run. However, make sure the costs will not eat up all your revenue, leaving you high and dry.

The Future of Marijuana Payment Processing: Crypto

Traditional banking services are not an option if you’re part of a high-risk industry, at least until the federal legalization of marijuana. Fortunately, several payment processing solutions are already available. These are cashless ATMs, ACH payments, and PIN Debit payments. But what about digital currencies?

Cryptocurrencies are an attractive payment solution because it allows high-risk merchants like dispensaries to securely accept payments without restrictions. For customers, there’s the extra benefit of privacy. A number of dispensaries have already started accepting crypto, as some cryptocurrencies cater to the marijuana industry.

Still, some cannabis merchants hesitate to accept crypto as a form of payment, with good reason. The market is volatile; the value of a coin can change many times within a day. This is where payment processing providers come in, serving as the go-between.

Customers pay in crypto using their preferred wallet. The payment processing company immediately converts the crypto into USD. The amount is then deposited into your bank account, preventing the dispensary from the volatility of the exchange rate.

Cannabis dispensaries that can receive the payment in crypto can also allow customers to use a coin they prefer. Some cannabis payment processing companies accept more than 125 cryptocurrencies. More importantly, your customers won’t be charged a convenience fee with the right provider.

The Bottomline for Cannabis Companies

The future of the cannabis industry is bright. As more states legalize marijuana, more cannabis businesses will open. By then, customer experience will be the most critical factor distinguishing your dispensary, second only to the quality of your buds. For this reason, you’ll need to improve their checkout experience.

Offering various payment options can boost your sales and customer satisfaction, and this is where choosing the best dispensary credit card processing provider comes in. When your customers are happy, they come back for more. They also recommend you to others. Plus, cashless transactions make life easier for you.

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