Does Stripe Accept Payments for CBD?

Unless you’ve been living under a rock, you’ve seen it: CBD has turned into a multi-billion-dollar industry. And for a good reason: Many people have found that CBD can help them with various physical and emotional ailments.

CBD’s rocket-like success is made all the more remarkable because it’s relatively new, having been legalized for sale and consumption only since the passage of the 2018 Farm Bill. However, the Farm Bill passed, but all the product’s issues didn’t disappear. Indeed, CBD remains very controversial, with many vendors refusing to carry the compound and others interested in selling the product struggling to do so. This begs an important question: Where can you find a merchant account processor who will allow you to sell CBD? Does Stripe process payments for CBD?

Can Stripe Process Payments for CBD?

No.

First, we need to explain why. CBD, despite its legalization, remains a high-risk merchant account. Many merchant account vendors will almost reflexively shy away from the compound, fearing its impact on their reputation and long-term ability to process credit cards. CBD is legal today, so why is it so hard to find a payment processor?

According to Stripe’s website, CBD is still on its list of restricted items. The same is true for any products containing CBD or THC. Stripe goes as far as to recommend that a vendor use another service to process CBD sales. Unfortunately, there is no explanation for this policy except a brief acknowledgment of changes to the law and a note that Stripe is still “unable to support” CBD sales.

A more in-depth look at CBD can help explain why Stripe won’t process payments for CBD. Fortunately, if you’re looking for a third-party merchant account processor who will process your high-risk product without any issue, Zenti is here to help. We work with a diverse group of high-risk vendors and can help you identify a merchant account solution that fits your needs and allow you to sell your product, regardless of the high-risk nature of your business.

Will Stripe Process Payments for CBD in the Future?

It’s hard to say.

To be clear: While it may be a high-risk industry, Stripe is still legally eligible to process payments related to CBD. Many vendors do. Other high-risk industries are commonplace among vendors like Stripe, including businesses like pharmacies. The fact that Stripe and other vendors refuse to process payments related to CBD relates to the company’s internal decision-making. There may be fear of lawsuits, changing federal regulations, or reputational management.

Regardless, since this is an internal decision, there’s hope for CBD vendors: It may change in the future. Ideally, this will happen as the need and desire of individuals to purchase and sell CBD continues to expand, which it appears very likely to do.

Unfortunately, until that time, vendors will have to find merchant account services that fit their needs as high-risk businesses.

What Is the Issue With CBD? 

CBD’s controversy stems from its source and levels of THC, or tetrahydrocannabinol. CBD comes from the hemp plant, making it a cousin to marijuana. It’s produced, processed and unquestionably chemically different from marijuana, Delta-8, Delta-10 or other cannabis-related products.

To be clear, CBD produced within legal parameters will NOT get you high. As set by the Farm Bill of 2018, for CBD to be sold legally, it cannot contain more than 0.3% THC. THC is the type of cannabinoid responsible for intoxication in marijuana. Someone can’t get high while using it when it’s at levels as low as this. However, that hasn’t failed to scare off other vendors — including Stripe — from processing the product’s sale.

This reality is even more frustrating, considering that not all CBD contains ANY THC. Indeed, a specific sub-class of CBD, known as Broad Spectrum, has 0%. Unfortunately, this form of CBD cannot be sold on Stripe, and many other vendors, like Amazon, have followed suit.

If you sell CBD, you’ll need a high-risk merchant account provider — like Zenti. At Zenti, we understand the challenges faced by high-risk vendors like you and specialize in identifying ways to lower your fees and afford the merchant account services you deserve.

What Is a High-Risk Business?

A high-risk business is a business that poses a risk to its merchant account provider. This risk may take many overlapping forms. For example, a company may be tagged as high-risk if it has a higher-than-average risk of chargebacks or fraud. This means that a customer is more likely in this industry to seek a refund on a purchase. While this is commonplace in some industries, it can be costly for the business provider and the merchant account processor, who will have to incur the expense of issuing a refund on any purchase.

Alternatively, a high-risk business may simply be a business that poses a reputational risk to a merchant account processor. The processor may decide it doesn’t want to be associated with this business category. For this reason, many businesses, like the adult services industry, are tagged as high-risk businesses.

Does this mean a high-risk business cannot access merchant account services? No, it still can. However, it should expect to look harder to get these services, provide more paperwork, and pay higher fees.

What Does Being a High-Risk Business Mean for Me? 

Unfortunately, being a high-risk business can have many consequences for your business.

First — and perhaps most impactful — is that the cost of doing business will increase. Every time you run a credit card, either in-person or online, you will have to pay more. These fees get expensive very quickly. Credit card fees usually come in two ways: You have to pay a flat fee per transaction and lose a percentage of the fee to the processor. For high-risk merchants, credit card fees can more than double. This increase in expense demonstrates the severe challenges associated with being a high-risk vendor. Fortunately, many merchant account processors, like Zenti, can work with you to keep your costs down and ensure you aren’t paying more than you have to.

There are also more requirements to do business as a high-risk vendor. For example, you will likely have to provide the following:

• A higher rolling reserve in the event there is a chargeback that you cannot afford.
• More paperwork, including credit history, bank statements, and more.
• More layers of approval must go through before you can start processing credit cards. This will delay the time it takes to get your business off the ground and may make it impossible for you to start a business quickly.
• Limits on the number of transactions you can charge in a single day. You may need to get a high-volume account if you have an extensive amount of transactions that you process.

Keep in mind that the level of risk can increase or decrease over time, depending on the specific business circumstances. For example, let’s say you’re a high-risk business but work with a merchant account provider to limit your chargeback ratio. This may result in you being “promoted” to a regular merchant account, which can lower fees. As such, consider working with a merchant account processor who can give you solutions limiting your chargebacks and the related fees you will have to pay.

However, all of this does relate to Stripe. As noted above, Stripe won’t process payments for CBD. Since Stripe won’t process payments for CBD, you will have to find an alternative merchant account provider to handle your needs if you’re looking to process credit cards. Indeed, this entire issue shows the importance of finding a merchant account provider who works with high-risk businesses. In addition, not only will Stripe not process payments for CBD, but it won’t handle many other industries, including adult entertainment, gaming, and others with controversial reputations. This can limit your options if you’re interested in engaging in these fields.

What Other Services Does Stripe Provide That I Might Need?

Since Stripe won’t process payments for CBD, you will need to look elsewhere to gain access to the necessary merchant account services that your business will need. Stripe has typically been given high reviews for its POS devices, online integration, easy ability to incorporate sales and marketing data, and much more. Unfortunately, if you’re in the CBD business, Stripe won’t process CBD payments, which means you’re out of luck here.

Thankfully, there are other options.

First, let’s consider what other services you may need.

Zero Cost Processing

As noted above, chargebacks and credit card fees can quickly get very expensive. As such, your business may need to consider alternative arrangements. Depending on your business volume and the ratio of chargebacks, you may find it worth examining a zero-cost processing account. This account will allow you to charge credit cards without paying regular fees. You will pay one set fee rather than a percentage fee based on the volume of sales you manage.

As you can imagine, this can save you extensive dollars on your credit card processing fees. However, if your account is configured wrong, it can also cost you money. Therefore, you need to work with a dedicated account manager to determine if this option is right for you.

Retail Services

For all the attention paid to the internet, retail services are still the bulk of credit card charges. As such, you need a merchant account provider to ensure access to all the necessary equipment. This means you can get the devices you can use to charge credit cards. These devices must be safe, secure, and reliable. You’ll also need to ensure you can get a quick replacement if the equipment stops working. You will also have to determine the charges for these services and if you run the risk of being charged different rates for retail credit cards rather than in-person ones.

Cryptocurrency Payments

The cryptocurrency market is now well into a total valuation of trillions of dollars. People are increasingly using cryptocurrency for investment and as a replacement for standard currency. Payers can move cryptocurrency quickly — combined with its volatility — it often means people are looking to get rid of the money and use it to purchase goods and services. This is enhanced in areas like CBD, where people may have privacy or reputational concerns about their purchases. Crypto’s anonymity makes it ideal for situations when someone wants to buy something but may not like that item to appear on their credit card.

This means that you, as a merchant, may have to pay for access to cryptocurrency processing services. This can get expensive and confusing, so you’ll need to work with a vendor who understands the crypto market and can work with you to keep your costs to a minimum.

Integration With Your Operations

You need a merchant account processor who can run credit card payments for you and ensure that your credit card processing integrates with the rest of your financial operations. In other words, how easily will your credit card process sync with your marketing? With your accounting? Your inventory? It would be best if you got answers to these questions to have the robust business operations you deserve.

As you can see, Stripe does not process payments for CBD. However, that doesn’t mean you’re doomed to be unable to find a merchant account vendor who meets your needs. At Zenti, we believe that all industries — regardless of their level of risk — should be entitled to safe, secure, and affordable merchant account services. Want more information? We’re here to help. Contact us today, and learn more about what we can do for your business.