A Simple Guide to CBD Credit Card Processing

Selling CBD products online should be straightforward, but many business owners quickly hit a wall. You might get an account with a standard processor like Stripe or PayPal, only to have it shut down without warning, leaving your funds frozen for months. This cycle of uncertainty is exhausting and can stop a promising business in its tracks. The problem isn’t your product; it’s that you’re operating in a “high-risk” industry that requires a specialized approach. Finding stable cbd credit card processing is the key to breaking free from this instability. This guide is your complete roadmap to doing just that. We’ll walk through everything from getting approved to keeping your account secure for the long haul.

Key Takeaways

Choose a High-Risk Specialist from the Start: Standard processors like Stripe or PayPal will eventually shut down your CBD business due to the industry’s “high-risk” classification. Partnering with a specialist ensures you have stable, long-term payment processing built on established, cannabis-friendly banking relationships.
Compliance is an Ongoing Job, Not a One-Time Task: To keep your merchant account in good standing, you must be proactive. This means having your Certificates of Analysis (COAs) ready, regularly auditing your website for unapproved claims, and actively managing your chargeback rate to prove you’re a reliable partner.
Build a Resilient Business with Diverse Payment Options: Don’t depend solely on credit cards. Integrating alternatives like ACH, eChecks, and digital wallets protects your cash flow and reduces transaction fees. When selecting a primary processor, prioritize their customer support, integration capabilities, and fraud prevention tools over just the lowest rate.

Why Is CBD Payment Processing So Complicated?

What Makes the CBD Industry “High-Risk”?

It’s a frustrating label, but understanding why processors classify the CBD industry as “high-risk” is the first step to finding a stable solution. This classification isn’t a judgment on your products or your business ethics. Instead, it’s about the financial and reputational risks that traditional banks and payment companies associate with the industry. Because CBD is still closely linked to cannabis in the public eye, many financial institutions worry about their reputation. They also point to a historically higher rate of customer disputes and chargebacks. As a result, many standard processors simply refuse to support CBD businesses, leading to sudden account freezes or shutdowns for merchants who manage to slip through the cracks initially.

Common Myths About CBD Payments

One of the biggest myths is that because CBD is federally legal, accepting payments should be straightforward. Unfortunately, legality doesn’t erase the “high-risk” tag for financial institutions. Banks and processors operate under their own set of rules, known as card brand (Visa, Mastercard) regulations, which are often stricter than federal law. They are wary due to the unclear regulatory guidance from agencies like the FDA, the potential for high chargeback rates, and the reputational concerns tied to the cannabis industry. This gap between what’s legal to sell and what’s “safe” to process is where most of the complications arise, leaving many business owners confused and searching for reliable payment options.

The Ever-Changing Regulatory Landscape

The rules governing the CBD industry are in a constant state of change, and this unpredictability makes traditional payment processors nervous. The legal landscape can differ from state to state, and federal oversight, particularly from the Food and Drug Administration (FDA), is still evolving. For a standard payment processor, this uncertainty is a massive liability. They prefer to work with industries that have long-established, stable regulations. This is why many mainstream providers explicitly ban CBD sales in their terms of service. They simply aren’t equipped to handle the compliance complexities and potential legal shifts that are part of operating in the CBD space.

How Processing Issues Can Hurt Your Business

Attempting to use a standard payment processor like Stripe or PayPal for your CBD business is a huge gamble. While it might work for a short time, you risk sudden and severe consequences. These platforms routinely conduct audits, and when they identify a business selling CBD, the fallout can be devastating. They can shut down your account without warning, freeze your funds for up to 180 days, and even place you on a permanent ban list (the TMF/MATCH list), making it nearly impossible to get another merchant account elsewhere. This can halt your cash flow, disrupt your operations, and put your entire business in jeopardy overnight.

The Real Risks: Fraud and Chargebacks

From a processor’s perspective, two of the biggest operational risks in the CBD industry are fraud and chargebacks. Since most CBD sales happen online, they are considered “card-not-present” transactions, which inherently carry a higher risk of fraud. On top of that, the CBD industry often sees a higher-than-average chargeback ratio. This can happen for many reasons: a customer might not feel the product’s effects as expected, be confused about the recurring billing, or even engage in “friendly fraud.” If your chargeback rate climbs too high, your processor can terminate your account to protect themselves from financial losses, leaving you without a way to accept payments.

What to Look for in a CBD Payment Processor

Finding the right payment processor is one of the most important decisions you’ll make for your CBD business. This isn’t just about finding someone to handle transactions; it’s about finding a true partner who understands the unique challenges of the high-risk landscape. A great processor provides stability, security, and the support you need to grow without worrying about sudden account freezes or closures. As you compare your options, focus on transparency, reliability, and features that are specifically designed for the CBD industry. A processor that openly discusses its fee structure, compliance tools, and support for high-risk merchants is already showing you they’re a partner worth considering.

How to Read Your Processing Fees

The first step in comparing processors is to get a crystal-clear picture of their fees. Don’t just look at the transaction rate; you need to understand the entire cost structure. Ask for a complete breakdown that includes setup fees, monthly service charges, and any other incidental costs. Some processors might also charge for things like chargeback disputes or PCI compliance. A transparent partner will provide a detailed schedule of fees so you can accurately forecast your expenses and avoid any surprises on your monthly statement. Understanding your payment processing fees is crucial for protecting your profit margins and maintaining healthy cash flow.

Understanding Monthly Charges

Beyond standard transaction fees, be aware of other potential monthly charges that can impact your cash flow. One common practice in high-risk processing is the use of a reserve. This is when a processor holds back a certain percentage of your sales revenue for a set period to cover potential chargebacks or refunds. While it’s a standard tool for managing risk, you need to know exactly how it works. Ask potential processors if they require a reserve, what the percentage is, and how long they hold the funds. This transparency is key to managing your business’s finances effectively and ensuring there are no unexpected holds on your money.

What You’ll Need for Setup

Applying for a high-risk merchant account is more involved than a standard one. Processors that specialize in the CBD industry need to perform thorough due diligence to meet banking and regulatory requirements. To prepare, you should gather all your essential documents ahead of time. This typically includes your business license, articles of incorporation, a voided check for your business bank account, and detailed information about the products you sell. You’ll also need a professional website with clear terms of service and privacy policies. Having everything organized will make the application process much smoother and faster.

How Sales Volume Impacts Your Rates

Your sales volume can directly influence the processing rates you’re offered. Processors often provide better pricing to businesses with a proven track record and higher monthly sales. For example, some providers may offer special, lower rates to merchants who process over $250,000 a year. If your CBD products are just one part of a larger retail operation, your overall sales volume might also help you secure a more favorable deal. When you speak with a processor, be prepared to share your current and projected sales figures to see if you qualify for volume-based pricing. It’s a simple conversation that could save you a lot of money.

What Is a Rolling Reserve?

A rolling reserve is a common risk management tool in the CBD industry, and it’s important to understand how it works. Unlike a standard reserve, a rolling reserve holds a percentage of your transactions for a specific period (e.g., 10% for 180 days) and releases it back to you on a rolling basis. This protects the processor from chargeback losses. It’s a key reason why you should avoid standard processors like PayPal or Stripe, which often freeze funds for months or shut down CBD accounts without warning. A dedicated high-risk processor will be upfront about their reserve policy from the start, so you always know where you stand.

Selling Globally with Multi-Currency Support

If you have ambitions to sell your CBD products to customers outside of your home country, you’ll need a payment processor that can handle international transactions. Look for a partner that offers multi-currency support, allowing you to accept payments in different currencies without complex conversions or high fees. This not only improves the customer experience for your international shoppers but also opens up new revenue streams for your business. Our platform is built to help you scale globally with stable processing and tools designed for your unique CBD payment needs, ensuring you can grow without borders.

Must-Have Security and Fraud Tools

In the high-risk world, robust security isn’t optional—it’s essential. Your payment processor should offer a suite of advanced fraud prevention tools to protect your revenue from fraudulent transactions and reduce chargebacks. This can include features like Address Verification Service (AVS), CVV verification, and IP intelligence to flag suspicious orders. A great partner will also provide proactive compliance monitoring to ensure your business stays aligned with evolving regulations. These tools work together to create a secure payment environment, giving you peace of mind and protecting your bottom line from unnecessary losses.

Top CBD Payment Processors to Consider

Finding the right payment processor is one of the most important decisions you’ll make for your CBD business. The ideal partner won’t just give you a way to accept payments; they’ll provide stability, security, and the support you need to grow. While one processor might be perfect for a small startup, another might be better suited for a large-scale operation with international customers.

The key is to look for a provider that understands the unique challenges of the CBD industry, from regulatory compliance to chargeback prevention. A processor with experience in high-risk markets will have the banking relationships and fraud prevention tools necessary to keep your transactions flowing smoothly. To help you get started, I’ve put together a list of reputable CBD payment processors known for their reliability and industry expertise. As you review these options, think about your specific business needs, including your sales volume, business model, and long-term goals.

Borderfree Payments

As specialists in high-risk industries, we designed our payment solutions specifically for the needs of CBD businesses. We focus on providing stable, long-term processing with an approval rate of over 98%, so you don’t have to worry about sudden account holds or closures. Our platform includes built-in compliance tools to help you stay on top of changing regulations and comprehensive support from a team that truly understands the CBD market. We’re here to offer a reliable foundation for your business, ensuring your payments are secure and your growth is uninterrupted. Our goal is to remove the payment barriers that hold CBD merchants back.

Square

Square is a well-known name in payment processing that has opened its services to CBD businesses. They offer a straightforward way to accept payments online, in-store, or on the go through their mobile apps. One of their main draws is a transparent pricing structure with no long-term contracts or monthly fees, which can be appealing for new or smaller businesses. Square’s platform is designed to be user-friendly, making it relatively simple to get set up and start selling. While they serve a wide range of industries, their entry into the CBD space provides a familiar and accessible option for merchants.

Easy Pay Direct

Easy Pay Direct has been working with high-risk industries, including cannabis and CBD, since 2010. Their long history in the space gives them a deep understanding of the market’s challenges. They specialize in providing CBD merchant accounts and make it a point not to penalize businesses for being considered high-risk. This focus means they have established the necessary banking relationships to offer stable and reliable payment processing. For businesses looking for a provider with extensive experience and a proven track record in the CBD industry, Easy Pay Direct is a solid contender.

PaymentCloud

PaymentCloud is recognized for its strong performance in the high-risk sector, particularly for CBD businesses. They are known for providing CBD-friendly gateway integrations, which simplifies the process of connecting your online store to your payment processor. Their emphasis on securing strong banking approvals translates into more reliable and consistent payment processing for their clients. This focus on the back-end infrastructure makes PaymentCloud a dependable choice for CBD merchants who need assurance that their payment setup is built on a stable foundation. They work to make the technical side of payment processing as seamless as possible.

North American Bancard

North American Bancard (NAB) offers specialized payment solutions tailored to high-risk industries, including the CBD market. They place a strong emphasis on security and compliance, which are critical for any business operating in a highly regulated space. NAB provides a range of services designed to protect merchants from fraud and ensure adherence to industry rules. Their experience with high-risk accounts means they have the infrastructure to support businesses that might be turned away by more traditional processors. For merchants who prioritize a secure and compliant payment environment, North American Bancard is a noteworthy option.

Shift Processing

Shift Processing focuses on delivering tailored payment solutions for CBD businesses, with a particular emphasis on achieving high approval rates for transactions. They understand that declined payments can lead to lost revenue and frustrated customers, so they work to optimize the payment flow for success. In addition to high approval rates, Shift provides robust fraud prevention measures to protect your business from bad actors. Their customized approach means they work with you to build a payment solution that fits your specific business model, helping you manage risk while maximizing your sales potential.

PayKings

PayKings is another strong option for CBD businesses, known for its transparent pricing and extensive banking network. They often use an interchange-plus pricing model, which can offer more clarity on how your processing fees are calculated compared to tiered or flat-rate structures. Their broad network of acquiring banks increases the likelihood of account approval and provides a safety net if one banking partner changes its policies. This diverse network is a key advantage in the high-risk world, making PayKings a reliable choice for CBD merchants seeking both transparent pricing and long-term stability.

How to Get Approved for a CBD Merchant Account

Getting approved for a CBD merchant account can feel like a huge hurdle, but it’s entirely manageable when you know what processors are looking for. It’s less about jumping through hoops and more about demonstrating that you run a legitimate, compliant, and stable business. High-risk processors aren’t trying to make your life difficult; they’re doing their due diligence to protect everyone involved. By preparing the right information ahead of time, you can make the application process much smoother. Think of it as building a case for why you’re a great partner.

Gather Your Essential Documents

First things first: get your paperwork in order. Underwriters need to verify that your business is legitimate, so they’ll ask for a standard set of documents. Having these ready to go shows you’re organized and serious about your business. You’ll typically need to provide your business license, articles of incorporation, and a voided check or bank letter for the account where you’ll receive deposits. They will also want to review your website to check for compliance. Make sure your site clearly displays your privacy policy, terms of service, and shipping and return policies. Compiling these essential business documents beforehand will save you a ton of back-and-forth communication.

Prepare a Clear Business Plan

A solid business plan shows a processor that you have a clear vision and a strategy for sustainable growth. Be ready to share details about your operations, including your marketing strategy, financial projections, and fulfillment process. Processors want to see that you’ve thought everything through, from how you source your products to how you handle customer service. Your plan should also prove that your business operates within all laws, which builds confidence that you’re a low-risk partner. This isn’t just for their benefit—it’s a roadmap that will help you run your business more effectively.

Build Strong Banking Relationships

You can’t just walk into any bank and open an account for a CBD business. Many traditional financial institutions are hesitant to work with industries they consider high-risk. That’s why it’s so important to partner with a payment processor that already has strong, established relationships with cannabis-friendly banks. These processors have done the legwork to find financial partners who understand the nuances of the CBD industry. When your processor has a reliable banking network, it creates a more stable foundation for your merchant account and ensures your payment flow remains uninterrupted. This is one of the biggest advantages of working with a high-risk specialist.

Verify Your Compliance from Day One

Compliance is the bedrock of a successful CBD business. From the moment you start, you need to have clear protocols in place to meet all legal and regulatory requirements. This includes everything from making sure your website has an age verification gate to avoiding unapproved medical claims in your marketing copy. A payment processor will want to see that you have a deep understanding of the rules and are committed to following them. At Borderfree Payments, we provide specialized payment solutions that include compliance tools and dedicated support, helping you stay on the right side of regulations as your business grows and the rules evolve.

Have Your Product Certificates Ready

For any CBD seller, the Certificate of Analysis (COA) is a non-negotiable document. A COA is a lab report that verifies the chemical makeup of your products, most importantly confirming that the THC level is at or below the legal limit of 0.3%. You’ll need to provide a Certificate of Analysis for every product you sell. Processors require these to ensure they are only supporting the sale of legal goods. Keeping these certificates organized and readily available for your application is essential. It’s also a great practice to make COAs easily accessible to your customers on your website, as it builds trust and transparency with your audience.

Demonstrate Account Stability

Underwriters will look at your payment processing history to gauge your risk level. If you’ve tried using a mainstream processor like Stripe or PayPal, you may have faced sudden account freezes or closures, which can be a red flag. These platforms don’t knowingly support CBD sales, and getting shut down can create a rocky history. Starting with a high-risk payment processor from the beginning helps you build a record of stable, predictable processing. A clean history with minimal chargebacks shows that you manage your business well and are a reliable partner, which is exactly what underwriters want to see.

How to Maintain a Secure and Compliant Account

Getting approved for a CBD merchant account is a huge milestone, but the work doesn’t stop there. To build a sustainable business, you need to keep that account in good standing. High-risk industries are under constant scrutiny, so maintaining a secure and compliant operation is non-negotiable. It’s about more than just following the rules; it’s about proving to your payment partner that you’re a reliable and low-risk merchant. By being proactive with compliance, security, and risk management, you can protect your revenue, avoid sudden account holds, and build a business that lasts.

Keep Up with State and Federal Rules

The legal landscape for CBD is a patchwork of state and federal regulations that can change quickly. Even though CBD is federally legal, it’s still considered high-risk partly due to unclear rules from agencies like the FDA. What’s permitted in one state might be restricted in another, and these laws cover everything from product labeling and marketing claims to THC content. Staying on top of these changes is your responsibility. I recommend subscribing to reputable CBD industry publications and regularly checking for updates from federal and state authorities. A compliant payment partner can also be a great resource for understanding these complexities.

Meet Your Bank’s Ongoing Requirements

Your payment processor and their acquiring bank have their own set of rules you need to follow continuously. These requirements are in place to manage the processor’s risk, and failing to meet them can lead to devastating consequences like frozen funds or sudden account shutdowns. Think of it as an ongoing partnership where you must consistently demonstrate that your business is operating transparently and responsibly. This includes keeping your chargeback rates below the accepted threshold, maintaining accurate records, and immediately communicating any significant changes to your business model or product line.

Monitor Your Compliance Regularly

Compliance isn’t a “set it and forget it” task. It requires active and regular attention. The best approach is to schedule periodic compliance check-ins for your business—maybe once a quarter. During these reviews, audit your website, marketing materials, and product descriptions to ensure they haven’t strayed from regulatory guidelines or your processor’s terms of service. Make sure you aren’t making any unapproved medical claims. Working with a processor that provides built-in compliance tools can make this process much easier, helping you catch potential issues before they become serious problems.

Implement Smart Risk Management Practices

Proactively managing risk shows your payment processor that you’re a serious and dependable partner. This primarily involves robust fraud prevention and chargeback mitigation strategies. Simple measures like requiring CVV codes and using an Address Verification Service (AVS) are standard. For added security, consider implementing more advanced tools that can flag suspicious orders based on IP address location, order size, or unusual purchasing behavior. By actively filtering out fraudulent transactions, you protect your revenue and maintain a healthy processing history, which is key to keeping your account secure.

Uphold Data Security Standards

Protecting your customers’ payment information is one of your most important responsibilities. Adhering to the Payment Card Industry Data Security Standard (PCI DSS) is mandatory for any business that handles cardholder data. Your website must have an up-to-date SSL certificate to encrypt information passed between your customer and your server. Beyond the technical requirements, embracing strong security measures builds trust with your customers. When shoppers feel their data is safe with you, they are more likely to make a purchase and become repeat customers, which is essential for long-term growth.

Use a Transaction Monitoring System

A good transaction monitoring system is your command center for payment operations. It gives you a real-time view of your sales, approvals, and declines, allowing you to spot and address issues as they happen. These systems are crucial because they help you identify patterns that could lead to chargebacks, such as a sudden spike in orders from a new location or multiple failed attempts from a single card. Many processors offer tools designed to help you manage your transactions and prevent chargebacks before they happen. Using these tools effectively helps keep your approval rates high and your account in excellent standing.

Exploring Alternative Payment Methods

While finding a reliable credit card processor is a huge win for any CBD business, it’s smart not to put all your eggs in one basket. Relying on a single payment type can leave you vulnerable if that processor changes its terms or your account faces a sudden hold. Diversifying your payment options is a powerful strategy to protect your revenue, reduce transaction costs, and give your customers the flexibility they expect.

Think of it as creating a safety net for your cash flow. When you offer multiple ways to pay, you’re not just catering to customer preferences—you’re building a more resilient business. Alternative methods like direct bank transfers or digital wallets often come with lower fees than credit cards, which can make a real difference to your bottom line. Plus, providing choices at checkout can lead to fewer abandoned carts and a smoother, more trustworthy experience for your buyers. Let’s walk through some of the best alternatives to add to your payment toolkit.

Accepting Cryptocurrency

Cryptocurrency might still feel like a new frontier, but it’s becoming a practical payment solution, especially for high-risk industries. Accepting digital currencies like Bitcoin or Ethereum can help you sidestep some of the hurdles of traditional banking. The best part is you don’t have to be a crypto expert to make it work. By working with a specialized payment provider, you can accept crypto payments without ever having to hold the currency yourself. These partners instantly convert the crypto to cash, so you get paid without facing any market volatility. This gives your customers a secure, private way to pay while you maintain stable revenue.

Using ACH and eCheck Payments

If you’re looking for a way to lower your transaction fees, ACH and eCheck payments are fantastic options. These are essentially digital versions of a paper check, allowing customers to pay you directly from their bank accounts. Because the payment moves through the Automated Clearing House (ACH) network instead of expensive card networks, the processing fees are significantly lower. This makes them incredibly cost-effective, especially for recurring orders or subscription models, which are common in the CBD industry. Accepting payments on a website through ACH is a reliable way to streamline your cash flow and save money.

Offering Digital Wallets

In an age of one-click checkouts, convenience is king. Digital wallets like Apple Pay, Google Pay, and Samsung Pay offer exactly that. They allow customers to complete a purchase with their fingerprint or face ID, eliminating the need to manually type in credit card numbers and shipping information. For your business, this means a faster, more secure checkout process that can significantly reduce cart abandonment. Many customers now prefer and expect these options, and offering them shows that your business is modern and customer-focused. Integrating these popular CBD payment solutions is a simple way to improve the shopping experience.

Allowing Direct Bank Transfers

Similar to ACH, direct bank transfers are another great way to bypass costly credit card fees. This method allows a customer to authorize a payment directly from their online banking portal to your business account. It’s a straightforward and secure process that many customers trust, especially for larger purchases. By offering direct transfers, you provide a reliable alternative for people who may be hesitant to share their card details online or who simply prefer managing payments through their bank. It’s a simple, effective way to add another layer of payment flexibility to your store.

Integrating Mobile Payment Options

With more and more people shopping on their phones, a seamless mobile checkout process is non-negotiable. Integrating mobile-friendly payment options goes hand-in-hand with offering digital wallets, but it’s about the entire experience. Your checkout page should be optimized for smaller screens, with large buttons and minimal fields to fill out. When a customer can move from browsing to buying in just a few taps, your conversion rates will reflect it. Prioritizing mobile payment options ensures you’re not losing out on sales from the growing number of consumers who primarily shop on their smartphones.

How to Choose the Right Partner for Your Business

Finding the right payment processor is about more than just securing a way to accept cards—it’s about finding a true partner who understands the CBD industry and is invested in your success. A great partner provides stable, secure processing and the tools you need to scale your business. As you evaluate your options, look beyond the surface-level rates and consider the entire support system a processor offers. The right choice will make your operations smoother, protect you from risk, and grow with you every step of the way.

Check for Seamless Integrations

Your payment processor should fit perfectly into your existing tech stack. A clunky or disconnected system creates friction for both you and your customers. Before you commit, confirm that the processor can integrate smoothly with the tools you already use. This includes your point-of-sale (POS) system for in-person sales, your ecommerce platform like Shopify or WooCommerce for online orders, and even your accounting software. A seamless connection ensures that your inventory, sales data, and financial reports are always in sync, saving you from manual data entry and potential errors.

Match the Processor to Your Sales Volume

Not all processors are built for the same scale. Some specialize in supporting startups and small businesses, while others are equipped to handle high-volume sales from day one. Be realistic about your current transaction volume and your growth projections. Ask potential partners if they have experience with businesses of your size and in your niche. A processor like Easy Pay Direct can offer solutions for both physical card terminals and online payments, ensuring they can support your business model whether you’re just starting out or processing thousands of transactions a month.

Plan for International Growth

If you have ambitions to sell beyond your country’s borders, you need a payment partner who can facilitate global commerce. International sales introduce complexities like currency conversion and varying bank regulations. Look for a processor that offers multi-currency support and has a proven track record of high approval rates for cross-border transactions. At Borderfree Payments, we provide stable processing designed for global reach, helping you expand your customer base without the payment headaches that often come with international expansion.

Read the Fine Print: Evaluating Contract Terms

A processor’s contract tells you everything you need to know about your long-term relationship. It’s easy to get locked into an agreement that doesn’t serve your best interests. Whenever possible, look for providers who offer month-to-month contracts. Be cautious of long-term agreements that come with steep early termination fees (ETFs), as these can make it difficult to switch providers if the service isn’t meeting your needs. Taking the time to fully understand your merchant agreement before signing can save you from major headaches down the road.

Test Their Customer Support

When a payment issue arises, you can’t afford to wait in a queue or argue with a chatbot. Your business needs access to real, knowledgeable human support that can resolve problems quickly. Before signing a contract, test a processor’s customer service. Give their support line a call. Are they easy to reach? Do they understand the nuances of the CBD industry? Some providers, for instance, offer a dedicated contact person for support, which can be invaluable. Responsive and expert support is a non-negotiable feature of a reliable payment partner.

Compare Fee Structures Side-by-Side

Payment processing fees can be complex, and it’s important to have a clear picture of all potential costs. Don’t just look at the advertised transaction rate. Ask for a full breakdown of their fee structure, including any setup fees, monthly minimums, batch fees, and PCI compliance fees. The best way to make an informed decision is to get quotes from a few different providers and create a spreadsheet to compare them. This helps you see the true cost of each option and avoid any unexpected charges that could eat into your profits.

Ask About Their Chargeback Prevention Tools

Chargebacks are a significant threat to any CBD business, and your payment processor should be your first line of defense. A high chargeback ratio can put your merchant account at risk of termination. Ask potential partners what specific tools and resources they offer for chargeback prevention and management. Look for features like fraud detection suites, transaction monitoring, and support for disputing illegitimate chargebacks. A processor like North that provides robust tools to reduce chargebacks is demonstrating a commitment to protecting your revenue and your business’s longevity.

Frequently Asked Questions

Why can’t I just use a standard processor like Stripe or PayPal for my CBD sales? While it might seem like the easiest route, using a standard processor is a major gamble. These companies have internal policies that explicitly forbid the sale of CBD products, regardless of their federal legality. They perform regular audits, and when they find you, they can shut down your account instantly and freeze your funds for months. The core issue is that their business model isn’t built to handle the compliance and risk management required for the CBD industry.

I’m a small startup with low sales volume. Will a specialized processor even work with me? Absolutely. Many high-risk processors, including us, specialize in helping businesses of all sizes, from brand-new startups to large enterprises. They understand that every business has to start somewhere. The most important thing isn’t your current sales volume, but your commitment to running a compliant and professional operation. As long as you have your business documents in order and a clear plan, a good high-risk partner will be ready to support your growth from day one.

What exactly is a rolling reserve, and does it mean I lose that money? A rolling reserve can sound intimidating, but it’s a standard risk-management tool in our industry and you don’t lose the money. Think of it as a security deposit. The processor holds a small percentage of your sales for a set period (often 180 days) to cover potential chargebacks. After that period, the funds are released back to you on a “rolling” basis. A transparent processor will explain their reserve policy upfront so you can plan your cash flow accordingly, unlike standard processors who might freeze all your funds without warning.

My account with another processor was just shut down. What should I do now? First, take a deep breath. This is a frustrating but unfortunately common experience for CBD business owners. The most important step is to act quickly to find a stable, long-term solution. Gather all your business documents and your processing statements from the last few months. Then, contact a processor that specializes in high-risk industries like CBD. They understand exactly what you’re going through and have the banking relationships needed to get you approved for a new, stable merchant account quickly.

Besides finding a good processor, what’s the most important thing I can do to protect my business? The most critical thing you can do is to be relentlessly proactive about compliance and risk management. This means regularly auditing your website to ensure you aren’t making any unapproved health claims, keeping your product Certificates of Analysis (COAs) up to date, and using the fraud prevention tools your processor provides. By actively managing these areas, you show your payment partner that you are a reliable, low-risk merchant, which is the key to maintaining a healthy and secure account for the long haul.

CBD Credit Card Processing: The Ultimate Guide