What is a CBD Merchant Account and Why Do I Need One
If you wish to deal in CBD oil and hemp products, you will need a CBD merchant account. But what exactly are CBD oil and hemp products? CBD or Cannabidiol is derived from hemp or cannabis plants. So too is marijuana, but the main difference comes down to THC content. CBD and hemp products contain less than 0.3% THC, so there are no psychoactive ingredients. But despite this being the case, CBD merchants are considered high risk.
Therefore, selling products derived from CBD oil online is not an easy task. Hemp is legal since the 2018 Farm Bill, and there are thousands of CBD oil and hemp products available. But you need a CBD merchant account to sell these products, and that is the tricky part. Although CBD oil and hemp products are legal, many banks and payment processors are reluctant to offer their services.

What is a CBD Merchant Account
If you wish to do business online, you need to offer credit card processing. If you are a high-risk business, you need one more step. You need a merchant account that accepts high-risk businesses. A CBD merchant has still one more hurdle. CBD merchants who sell CBD and hemp products need a CBD merchant account.
This is the same kind of merchant account that a high-risk merchant uses, except that it has been approved to sell products derived from CBD and hemp. But many banks and credit card processors are still reluctant to offer merchant services to the CBD industry. This makes it difficult for CBD merchants to get set up.
That is not to say that you cannot get a CBD merchant account, but expect to pay higher fees over normal merchant accounts. And finding the right merchant account provider to handle your CBD business may take some time. And the problems selling CBD and hemp products do not end there. Many CBD merchants run into difficulties with their merchant accounts later down the road.
It is not uncommon for a merchant account provider to drop your CBD business if it becomes too high risk. So life as a CBD merchant starts out hard, but several companies are offering CBD payment processing and merchant services. The key is finding the right merchant account provider that can handle your CBD business.

Why is CBD considered a High-Risk Industry
Many businesses come with a high-risk classification. For example, travel companies and furniture sellers face a lot of cancellations and chargebacks. And when they consider you a high-risk merchant, banks charge more for their merchant services. But why is a CBD oil merchant high risk? Simply put, selling CBD oil and CBD products is a very new business.
And as with many new businesses, people who sell CBD-based products often include claims they cannot back up. The Food & Drug Administration has not validated the beneficial effects of most CBD products. You would think this might hamper a CBD merchant, but in fact, the opposite is true. For years, many people who sell CBD items, claim benefits ranging from stress relief to better sleep.
Now you can find CBD merchants who claim their CBD oil can help depression and much more. While these effects may turn out to be true, without evidence, claiming to have the best CBD product is not enough. People expect results from the products they buy online, so a CBD oil merchant must be careful with their claims.
Many laws are different from state to state, so claiming the best CBD oil may be illegal if it goes over that state’s THC limits. For these reasons, a CBD oil merchant may encounter more chargebacks. And more chargebacks mean you pay more for CBD credit card processing. So the CBD industry possesses a high-risk classification.

Is it easy to get a CBD merchant account
So now that we know a CBD merchant needs a CBD merchant account, is it easy to find one? Now that’s a tricky question to answer. While it is relatively easy for most high-risk merchants to get a merchant account, if you sell CBD, this is not the case. Even though the 2018 Farm Bill technically means CBD oil and CBD products are legal, there are many stipulations.
But this did not stop payment processors from getting in on the CBD industry at first. In fact, once the Bill was passed, CBD merchant accounts were easy to obtain. Credit card processors were happy to get in on this new business and CBD payment processing was very active. CBD businesses prepared for the boom, and a CBD payment processor was easy to find.
Until one overlooked detail came to light – quality control. And with that one small detail, CBD payment processors started to close accounts. CBD merchants need to ensure that the CBD and hemp products they sell are within the legal limit.
But consumers have no way of testing claims that the best CBD product actually is the best, or what percentage of CBD it contains. It may contain no CBD at all, which would lead to more chargebacks. It may contain too much THC, which would make it illegal. Many CBD payment processors thought this risk to be too high. So today, it is not so easy to get a CBD merchant account. But it is possible.

What to look for when choosing a payment processor for CBD Products
Although CBD merchant processing is a difficult task, several companies offer their services. So while their task is not so easy, you should pick the CBD merchant account that is right for you. You should use the same criteria you would for any merchant account application. A clear contract is critical so you don’t endure hidden fees. Your payment gateway should easily integrate into their CBD merchant processing software. And while low fees are a plus, they’re difficult to find.
A CBD merchant account will attract higher fees so make sure the processor accepts all credit cards. Most of all, CBD merchants should look for a CBD merchant processing company with great customer support. Your CBD merchant account may encounter more chargebacks than a regular merchant account. So you need a payment processor you can rely on for support.
Reasonable and clear contract terms with no hidden fees
As with all high-risk businesses, credit card processing fees are high. But this should all be clearly stated in your contract under the list of payment processing fees. There are many different CBD merchant processing companies, each with different fees. From compliance fees to terminal fees, you may also have to pay monthly fees. And the fees you need to be most clear about are early termination fees or ETFs. These are fees that the payment processor will charge you if you terminate your contract early.
These fees can be incredibly high, so read your contract carefully. All of these fees depend on how your payment processor handles its payment processing business. While you should accept that high-risk businesses pay more than a normal merchant account, you should still know what all of the fees are. Make sure this is clear before you set up your merchant account.

Easy integration
If you plan to deal in CBD or hemp-related products from a land-based store, you will need a POS terminal. It is best to buy this terminal or choose a payment processor that provides it for free. But it’s more likely that your CBD merchant account will deal with an online store. Your credit card processing should integrate easily with your payment gateway. Many payment processing companies provide a payment gateway for you upon the setup of your merchant account.
At the very least, they should offer support to integrate your existing payment gateway. You have enough issues as a high-risk business without worrying about credit card processing. This is the job of your payment processor. But take note that you are likely to expand your business to other countries with different laws. Make sure your payment gateway can filter out customers that live in areas where you cannot sell CBD products.
Accept all Card Brands
All high-risk businesses have one trait in common, and that is the desire to make money. If your customer gets to the checkout and an option is not available for their credit cards, you have lost a sale. And you may only operate in a certain area today, but the benefit of running CBD businesses online is easy expansion. Therefore, make sure that your CBD credit card processing can handle all credit cards.
And that includes local credit cards in an area you might expand into. Getting a CBD merchant account is not an easy or cheap process, so do not hurt your business with inadequate credit card processing. Credit card processors do not wish to lose a sale either, that’s how they make money. So make sure to tell your payment processor where you intend to sell your CBD products, so they can support you.

Low Fees
While many high-risk businesses can afford to shop around and negotiate, with CBD sales, it is not the same. You must accept that getting approval for a CBD merchant account will cost more than for other merchant accounts. Once you realize this, be careful of offers of instant approval for your merchant account. This is simply not the case. A CBD oil merchant is not getting instant approval for a CBD merchant account. And CBD sales attract higher fees, so you will likely have to accept tiered fees.
While we would prefer a CBD merchant account with an interchange-plus model, a merchant account like this is unlikely. Maybe if you reach a certain volume, you can renegotiate your merchant account contract. But the biggest fee is always the credit card processing and payment processing rates. This is why an interchange plus model is the best for a CBD merchant account.
Customer support
We would recommend anyone looking to set up a merchant account to get adequate customer support. When it comes to high-risk businesses this is even more important. With that in mind, CBD merchants should look for a CBD merchant account provider that offers amazing customer support. CBD merchant accounts cost more than regular merchant accounts because of two main reasons. There are legal issues that may arise from selling CBD oil, and a higher rate of chargebacks.
Your payment processing provider is accepting the high risk, but that is of no use if you cannot contact them easily. A CBD oil merchant with credit card processing issues needs support as soon as possible. Make sure your CBD merchant account comes with the support that you need. While email is fine for normal issues, you need a phone line or chat service for immediate issues that arise. And your payment processing provider should help you to minimize and prevent chargebacks.

Which CBD Payment Processor Is Best For My Business?
Even with a merchant account in place, and an understanding of the law, life as a CBD merchant can be hard. The laws change all the time, and vary from country to country, making it a challenge to deal in CBD and hemp. But as with all high risk, the rewards can be high too. The high-risk side of CBD oil offers a successful business a great slice of a growing market. As a CBD merchant, this high-risk simply means you have to work harder to find a reliable merchant account. This merchant account is the one willing to accept the high risk. CDB businesses are all high risk, but that risk can be further categorized.
For example, if you can be sure the CBD and hemp products you sell contain no THC, the high-risk level is slightly reduced. The key is to decide just how high risk you will be, and this will help you secure a merchant account. Next, look at your sales volume to estimate your credit card processing needs. Some payment processing providers such as Square can arrange a shared merchant account for you if you are a low-volume CBD merchant.
Be aware that there is another risk in this case as you share this account with other businesses that are high risk. This can create an unstable merchant account as you are not the only user. However, our list of the top 3 CBD merchant processing providers in 2021 should be all you need.

Top CBD Merchant Processors
There are many providers offering merchant accounts to high-risk companies. While not as many offer a CBD merchant account, there is still an adequate choice for CBD merchants. There are many qualities you need from your merchant account, but the main thing is that they accept the high risk. They allow CBD businesses to accept credit cards and sell products that contain CBD and hemp. This is the main function that a CBD merchant needs. The deciding factor for which is the best for your business is likely to be the cost of the merchant account and your sales volume.
PaymentCloud
PaymentCloud has been helping high-risk merchants set up merchant accounts since 2010. With no application or setup fees, they are a great choice for a first-time high-risk operator as you get a free quote. However, they do not have fixed pricing, so they deal with each high-risk operator on a case-by-case basis. What makes PaymentCloud stand out from other high-risk providers is its excellent customer support. They partner with several banks and processors to offer a greater chance of securing your CBD merchant account.
But that is not to say that this service is cheap. They do not disclose the pricing model, so you will only get a payment plan that suits your individual CBD business. While this makes your application process more likely to succeed, it may be more expensive than with the other processors. They utilize the Authorize.net payment gateway. This includes Authorize.net’s developer software which makes integration easy with your website. The gateway setup is free, but Authorize.Net charges a monthly fee for the gateway use.

Square
Square is one of the newest providers, helping CBD businesses since 2019. They have higher processing fees per transaction than many other providers. But this comes from their lack of merchant account fees, making Square an ideal solution for low-volume CBD merchants. The flat-rate fee means you pay more per transaction, but you have no monthly minimums. There are no monthly fees or statement fees of any kind. Their range of credit card processing is incredible, and it is hard to believe you pay no monthly fees for them.
In fact, you get a free online store that will sync up with your inventory. But there is one downside to this model. Basically, you are in a group with other high-risk merchants, sharing a merchant account. Sharing an account with other high-risk businesses brings with it a risk of your account being frozen without any warning. So while it is a great model that allows you to get your business up and running quickly, it is not without risk. This risk of account termination makes a merchant account a better option for higher volume CBD businesses.
SMB Global
Starting operations in 2016, SMB Global are high-risk specialists. With a quite reasonable pricing model, they can provide a merchant account for almost any high-risk business. This is particularly useful for CBD businesses. While their rates are reasonable, they deal with every case individually. So while they are likely to be able to set a CBD merchant account for you, the fees may be more expensive than other providers. As with any merchant account, the pricing will reflect your processing history and business model.
As with most providers, you will likely have a 3-year contract and an early termination fee. As we mentioned previously, an ETF can be quite expensive, so make sure you have a business model you trust in. Their high success rates for securing CBD merchant accounts come from their use of offshore merchant accounts. The main drawback with SMB Global is that these accounts are not cheap. So they require a minimum monthly processing volume of $50,000 for their merchant services.