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Why You Need a Reputable Merchant Account, Not Just a Payment Processor

Dispensaries are often at a loss when it comes to getting a marijuana merchant account. There is a lot of confusion and misinformation out there regarding merchant accounts, third-party payment processors and the payment services that retailers need. Whether you’re looking for a CBD or cannabis merchant account, understanding how this works will help you avoid working with shady payment providers. So, let’s get into the weeds and clarify these terms.

What is a merchant account?

A merchant account (also known as merchant services) allows businesses to accept payments in multiple ways, typically by accepting debit cards or credit cards. The merchant account is established under an agreement with an acquiring bank for the settlement of payment card transactions. In some cases, a third-party payment processor or independent sales organization (ISO) is involved. Whether a merchant enters into a merchant agreement directly with an acquiring bank or through a third party, the agreement contractually binds the merchant to obey the operating regulations established by the card associations. At this moment, cannabis transactions are prohibited on debit and credit networks.

Why you need a cannabis merchant account

Cannabis businesses need the convenience of accepting electronic payments. Cannabis merchant accounts, however, are often opened using false information. Once the banks and credit unions find out the true nature of the transactions, they are quickly closed. To make things worse, you can find yourself blacklisted with the card associations, which could prevent you from obtaining a merchant account in the future. Having a transparent cannabis merchant account is key to sustainability. No more getting shut down every few months.

Does a merchant account mean credit card?

Most people associate a merchant account with credit cards but merchant accounts include other types of payments too. Cannabis credit card processing is prohibited for cannabis transactions. Having a Hypur cannabis merchant account allows you to conduct electronic payments today, and if or when cannabis is legalized on a federal level and the branded card networks allow it, the merchant account will have already gone through the underwriting process. All that’s needed is to “flip the switch” and the legitimate merchant accounts will gain full credit card processing. This is why having a reputable cannabis merchant account is so valuable.

What is a third-party payment processor?

A third-party payment processor (TPPP) is an intermediary between you and an acquiring financial institution. The TPPP may accept funds from a variety of branded card networks you may be familiar with including VISA, MasterCard, American Express, and Discover, however, this does not make a card-based transaction permissible for cannabis. In some cases, TPPP’s are trying to mask the true nature of a transaction by using shell games such as having a credit or debit card load a stored value card that is then used for cannabis.

Another aspect of TPPP’s is that monies are usually held in the TPPP’s account. There is no guarantee that merchants will be paid, and consumers wonder where their money is being held and for what purpose. Without a transparent cannabis merchant account, your current payment processor might actually be breaking card rules and putting you and your business at risk. CBD and cannabis retailers need to use a payment processor designed for cannabis, and one that permits such transactions.

How to get a cannabis merchant account

Not all financial institutions are willing to provide a merchant account to marijuana-related businesses. That’s where Hypur can help. We can help you get set up with the best marijuana merchant account from a reputable financial institution in your state. Hypur has a national footprint, which means that we can help you no matter where your business is located.

Get in touch now so that you can start enjoying the benefits of a marijuana or CBD merchant account today.

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