Best CBD Merchant Accounts

The credit card processing industry has placed CBD products firmly in the high-risk category, making it much more difficult and expensive to get a merchant account. Businesses can find themselves labeled as high-risk for any number of reasons. For CBD products, the main reasons are (1) high chargeback rates, (2) legal issues affecting the distribution of the product, and (3) unsubstantiated claims regarding the efficacy of CBD products.

Chargebacks are a known risk for just about any business, but the chance of experiencing one is much higher with CBD products. Unfortunately, the unproven claims of CBD’s beneficial health effects make it much more likely that consumers will file a chargeback if they feel that the CBD-based product they purchased didn’t help them or make them feel better at all.

The banks that underwrite merchant accounts also don’t like to deal with businesses that sell a product that is on shaky or unclear legal grounds. Currently, CBD laws vary widely from state to state, creating a number of legal conundrums for merchants who sell them.

Finally, like many products in the nutraceutical category, the purported beneficial effects of CBD oils have not been approved or validated by the Food & Drug Administration (FDA). With little or no peer-reviewed research currently available to measure the benefits of CBD use, the floodgates have been opened for businesses to tout CBD as a potential cure for… well, just about anything. Initially offered to help you relax and alleviate stress, CBD is now claimed (by some people, at least) to be helpful in treating depression, anxiety, and even autism.

The 2018 Farm Bill removed hemp-based products with less than 0.3% THC from the Schedule I list of controlled substances. However, to produce and sell your product legally, you must be a licensed grower and comply with all applicable federal and state laws. Since each state has its own specific requirements, it’s best to research your state’s laws and consult with an attorney or qualified consultant.

The passage of the 2018 Farm Bill was expected to make it much easier for CBD merchants to obtain merchant accounts and accept credit cards like any other business. However, Elavon began accepting CBD merchant accounts but shut them down due to quality control issues with the product. This situation highlights the need for merchants to ensure that their products contain less than 0.3% THC to avoid legal jeopardy.

The FDA still considers ingestible CBD products to be illegal because it has already approved the drug Epidiolex for use in treating certain forms of epilepsy. The FDA has not approved the use of CBD-based products for any other purpose, and research on the health benefits of CBD is still in its infancy. As a result, only a few high-risk specialists accept CBD businesses, and they may require an offshore merchant account. CBD merchants should expect high processing rates and additional restrictions beyond those typically required for a vanilla high-risk account.

If you are a CBD merchant, choosing a reputable and reliable payment processor is essential. We recommend choosing a processor with experience working with CBD merchants and providing fair prices and honest service. However, due to the high-risk nature of the industry, expect to be assigned a high-risk merchant account with additional restrictions and high processing rates. When obtaining a quote from any provider, discuss the restrictions they impose.

The underwriting process required to get approved for a merchant account can be tedious for any business owner, but it’s particularly difficult if you sell CBD products. Nonetheless, completing this process before you start processing credit card sales can save you from having your account suddenly shut down once you’ve started using it. You should be skeptical of providers offering “instant” approval of your merchant account, as they often defer this critical step until after you’ve already signed a long-term contract.

Any high-risk merchant account will cost significantly more than a comparable low-risk one. Be prepared to have to accept a tiered pricing model (although some established businesses might be able to negotiate a more affordable interchange-plus model). You can also expect to be charged higher monthly and annual fees as well, although the difference in these costs isn’t as much as it is with processing rates. Another additional “expense” that most high-risk merchants have to contend with is a rolling reserve. That’s where your processor withholds a certain percentage of your funds every month until the reserve is met. While you’ll eventually receive all your money, rolling reserves can create serious cash flow problems for a small or newly established business.

While we prefer month-to-month billing arrangements that don’t lock you into a long-term contract or force you to pay an early termination fee (ETF) if you close your account early, CBD merchants will usually have to accept both a long-term contract (typically for three years) and an ETF. Be aware that almost all long-term contracts include an automatic renewal clause that extends your contract, typically for one-year periods at a time.

If you plan to sell CBD products out of a retail location, you’ll need a mobile processing system, terminal, or point-of-sale (POS) system to read your customers’ cards. Your processing hardware should accept EMV payments at a minimum and preferably NFC-based (“contactless”) methods. For some specific recommendations, check out our article on the best credit card machines and terminals for small businesses. We also highly recommend purchasing your terminals outright rather than leasing your equipment. Leasing arrangements lock you into noncancelable long-term contracts, and you’ll end up paying several times more in leasing fees than your machine is worth.

Naturally, you’ll want to be able to sell your CBD products to as many customers as possible, and selling via a website allows you to do that. As we’ve noted above, there are still many legal grey areas regarding CBD sales across state lines that you’ll want to be aware of before you launch your website. At the same time, the recent legalization of hemp-based products is creating eCommerce opportunities that weren’t there as recently as six years ago. All of our recommended providers can set you up with a high-quality payment gateway that will allow you to process transactions over the Internet and significantly expand the reach of your business. As not all states have relaxed their marijuana laws, you’ll want to find a gateway that will automatically filter out customer addresses where CBD products are still restricted.

In researching dozens of merchant account providers, we’ve found that high-quality customer service is the real secret ingredient that separates the merely average providers from the truly outstanding ones. Customer support issues occur more frequently with CBD and other high-risk merchants, so you’ll want to pay particular attention to a provider’s reputation in this area.

As of 2024, Stripe’s Prohibited and Restricted Businesses policy prohibits using the company’s platform to sell products containing any amount of CBD/THC. Violation of this policy will result in immediate account closure and could possibly get you placed on the Terminated Merchant File (TMF) or MATCH List.

While PayPal will allow almost anyone to sign up for a business account, its Acceptable Use Policy has always prohibited using its platform to sell any CBD products. Violation of this policy will result in the closure of your PayPal account. As of 2024, this policy is still in effect, and we haven’t seen any indication that it will change anytime soon.

Shopify supports the sale of hemp-derived CBD products in states where it’s legal to do so. However, you’ll have to sign up with a CBD-friendly third-party payment gateway provider (such as DigiPay or Bankful), as its in-house Shopify Payments credit card processing service does not support CBD sales.

In Canada where recreational cannabis is legal at a federal level, cannabis dispensaries as well as CBD sellers can use the Shopify platform (though not Shopify Payments) for domestic cannabis sales.

BigCommerce offers extensive support to CBD businesses, including access to a choice of over 65 third-party payment gateways. The company also provides extensive information about the ins and outs of running a CBD business on its website and is an excellent resource to refer to when setting up your CBD business.

Visa-owned Authorize.Net doesn’t like to talk about CBD, but the truth is that you can process CBD sales over the Authorize.Net gateway. In addition to other legal requirements, you’ll have to use a merchant services provider that has approved your business for CBD sales. This shouldn’t be a problem, as PaymentCloud and many other CBD merchant account providers use Authorize.Net as their primary gateway option. Note that if you’ve signed up for payment processing services directly through Authorize.Net, you probably won’t be able to use that account for selling CBD products.