What CBD payment processors are available for the CBD industry?
Anyone who wants to sell CBD products online is currently having a hard time. Since March 1, 2018, the online giant Amazon has removed almost all acceptable CBD products from its range. Accessories such as e-cigarettes or add-on devices are now also banned. CBD retailers had received an email notification shortly before, but could not protect themselves that their product pages had been disabled.
In addition, online stores selling CBD products can no longer charge credit cards: Visa and Mastercard, two major international credit card companies, refuse to work with hemp retailers. Apparently, the partners of the credit card companies, i.e. the payment providers, have been instructed to refuse business with CBD products.
After Amazon recently banned CBD products from its Marketplace, this is another blow to merchants selling legal hemp products. What lies behind the practice of the credit card companies and Amazon remains unclear.
Luxembourg banking law prohibits cannabis business
Mastercard and Visa thus want nothing to do with hemp products. Trade with CBD products such as CBD extracts, CBD oils and hemp cosmetics is legal in Germany, Switzerland and also in Austria. However, various payment systems have stopped their cooperation there. Reason: Visa and Mastercard no longer want to partner with cannabis retailers. What is the situation with PayPal? Rumors circulated in the industry about a workaround at PayPal, but the hope did not last long and accounts continue to be blocked. The reason is that PayPal's European subsidiary is based in Luxembourg. Banking laws there do not allow business with cannabis companies.
Surprisingly, however, this ban does not seem to apply to all CBD businesses, although PayPal said when asked that its payment platform does not currently allow the services to sell cannabidiol products. Vaay, one of the largest CBD brands from Berlin, offers payments via PayPal. According to the company, the payment platform reportedly approached them because the company complies with all legal requirements.
Some CBD products are actually in violation of the law. Not only the plants, but also some oils are not allowed to be sold without a permit. Therefore, it is clear that some payment services do not want to provide services here. However, it turns out that PayPal is quite selective. It seems that not all CBD merchants are treated equally. Large providers in particular benefit from this. This makes it difficult for small businesses to survive in the market.
Small CBD stores suffer from widespread general suspicion. CBD stores are, to all appearances, under general suspicion of disregarding cannabis regulations and the legality of the products offered. When searching for a German provider for credit card payments, merchants find that many providers do not want cannabis stores as buyers. For both traditional banks and digital payment providers, the CBD industry is difficult.
As a result, some merchants process credit card payments through Dutch providers. Simple payment methods are now essential for a successful online business, which is why CBD retailers have turned to Klarna and other payment providers, among others.
CBD retailers should look for alternatives
For CBD stores, it is a serious problem when payment systems do not want to work with them. How do they sell their products online? Mastercard and Visa have enormous market power. Many products are made from EU-certified industrial hemp, which can be grown in the entire European Union. Shipping only goes to countries where the products are legal. Most stores check every order for legal compliance. In the end, some merchants get lucky and find payment providers that cooperated with them. For others, they have no choice but to switch to cryptocurrencies like Bitcoins. This issue was discussed at length at the ICBC International Cannabis Business Conference.
Alternatively, you can use the Klarna payment service. Again, there are said to be problems with opening a business account because the Swedish company does not offer business accounts for CBD stores as easily. This is due to the still very young legal situation for the sale of CBD. Unlike PayPal, Klarna wants to verify sellers individually and requires additional business documents, for example.
Since the CBD market and therefore the legal environment is still very young, Klarna is trying to find its way in different jurisdictions. Unlike PayPal, Klarna wants to verify merchants individually. For example, some merchants had to prove that they were not selling CBD crystals or CBD flowers. Klarna also requires additional business documents.
What CBD payment processors (PSPs) are there in the CBD industry?
One of the biggest challenges in (online) trading of CBD products is probably finding a payment solution provider (PSP). This is because cannabidiol in various forms, although already widely accepted by the population, still has the reputation of being an illegal drug. Within PSP, then, it is what is known as a "high-risk" business, comparable to gambling or adult entertainment. As it is a relatively young industry, it can be assumed that there is an increased risk of payment defaults, credit card fraud or chargebacks in the CBD trade. We provide a brief overview of European payment systems that differ not only in cost.
DIMOCO: DIMOCO is a leading innovator in the payment and messaging space. As an industry leader in mobile technology, the company paved the way for carrier direct billing and mobile messaging services. DIMOCO stimulates the creation of new payment and messaging services based on FinTech philosophy. The group is trusted by global carriers, content publishers, card schemes, major CBD merchants and companies.
This Austrian company conducts millions of mobile transactions and employs more than 170 people from over twenty countries. Credit card processing is done throughout the EU except for Slovakia and Belgium. In addition to services from Mastercard, Visa and 50 to 60 different other providers, a Woocommerce API is available, among others.
B2B Pay: B2B Pay is a simple payment solution for global businesses that dramatically lowers fees and significantly reduces processing bureaucracy. Global SMEs have to overcome bureaucratic hurdles and face high transaction costs to receive money from CBD wholesale, for example. Processing payments via B2B Pay makes transactions up to 80% cheaper and faster. For companies outside Europe, they offer a virtual bank account with IBAN number and the possibility to make SEPA transfers.
Zing.gg: Whether you're starting a new business or making your next million, effective payments management is likely a key factor in your success. However, navigating the payments environment can be difficult. You can waste a lot of time and efficiency if you don't find the perfect solution for your business.
As a provider of customized payment processing solutions, Zing.gg is committed to providing the highest level of personalized support. This means a one-on-one relationship with a private account manager and a dedicated support team to take care of your current needs. You won't need them often, but it's good to know they're there.
Total Processing: Founded in 2015, Total Processing strives to provide the highest standards of service and security in the payments market. The team is dedicated to helping others avoid the myriad of complex and unnecessary payment processing hassles. They make accepting payments as easy and secure as can be. Total Processing is constantly finding ways to provide the best service to their clients while keeping up with the latest payment processing technologies.
Due to the rather inconsistent regulations on CBD products (e.g. THC content) in Europe, these providers are always interested in knowing the online store's assortment. Therefore, it is also helpful if you know the products you are selling well, right down to the manufacturing method. To validate the THC content, you must also have a corresponding Third Party Certificate (COA) issued by your company.
What to look for when choosing a payment service provider / PSP for your online store.
Finding a secure and stable CBD merchant account can be challenging for German entrepreneurs. Businesses selling CBD products are considered risky, which requires a dedicated merchant account and payment processor. In Germany, many CBD merchants cannot find a payment system to validate their transactions, or vendors stop processing payments shortly after approval. Another affront for CBD merchants is finding a solution that is compatible with their shopping cart or payment gateway provider and offers customized integration capabilities. The right integration is essential to providing a better shopping experience for your customers and increasing your sales conversion rates.
• Reliability: it can hardly be worse if the PSP suddenly fails, slowing down your store. Pay attention to the contracts presented! For these and similar cases, it can be useful to have a backup payment gateway.
• Technical connection: Most interfaces between the online store hoster, the payment service provider and your bank are standardized. It is best to check this before you decide on a hosting provider.
• Costs: There are different variants here. All providers are of course interested in the highest possible turnover and will work with you depending on the volume. Or depending on whether your store can guarantee this or will offer it soon. Startups without a proven track record or sales history tend to have worse terms than an established company with an impressive track record.
• Service, quality and readily available customer support are important. Ideally, with personal contact. Worst case scenario, you spend more time on support than on operations.
Easy payment processing for the German CBD industry.
CapitalPay, B2BPay or EU Paymentz, with many years of experience in processing high-risk payments, are able to offer a comprehensive and sophisticated payment processing solution for CBD merchants in Germany and the rest of Europe. They work with a multi-channel payment gateway that enables your store to offer products online, from mobile devices and directly at the point of sale. A payment gateway solution integrates with leading e-commerce and CRM systems and includes advanced fraud prevention and risk management tools. Alternative payment methods are becoming increasingly popular among consumers and are often preferred over credit cards, especially in Germany. Unlike the competition, they offer CBD merchants access to several popular alternative payment methods such as Sepa, Giropay, Klarna, Sofort and many others.
The biggest challenge for CBD merchants is finding a payment processing solution that is compatible with most CRM or e-commerce systems. On Payment Gateway Developer Portal you can find plugins that integrate Payment Gateway with Shopify, Magento, WooCommerce, Drupal, PrestaShop, Opencart, Shopware and various other e-commerce solutions.