CBD Payment Processing: How It Works and Tips to Reduce Fees

  • By Danielle Dixon
  • Jun 13, 2024
  • Upselling Tactics

A common challenge that CBD sellers face: Finding a reliable CBD payment processor.

Here’s why: Many credit card processors consider CBD retail a high-risk industry. Therefore, payment terms for CBD may be stricter, and in the worst cases, credit card processing for CBD often results in high fees and unfavorable terms.

Fortunately, there are a variety of providers that offer CBD merchant services. These providers have industry experience, understand the payment processing challenges of the CBD industry, and commonly offer better rates (compared to traditional merchant processing).

Interested in how you can lower your CBD credit card processing rates? Struggling with reliability?

Stay tuned as we share key considerations for choosing a CBD payment processor and offer tips and strategies to help you secure better rates for your CBD business. We also offer recommendations for the best CBD payment processors in the industry.

What Is High-Risk CBD Payment Processing?

A high-risk merchant account is designed for businesses more susceptible to chargebacks and fraud, like those in the CBD, hemp, delta-8, and THCa industries facing stricter regulations.

These accounts usually have stricter terms and higher fees due to the increased risk. However, they offer crucial CBD and cannabis payment processing solutions that help these businesses operate smoothly and efficiently in a challenging market.

High-risk accounts often entail the following:

  • Stringent scrutiny during the application process
  • Higher likelihood of financial holds and reserve requirements
  • Increased processing fees and chargeback rates

CBD Payment Processor vs. Payment Gateway

Understanding the difference between payment gateways and processors is important.

A payment gateway captures and transfers payment data from the customer to the acquiring bank, acting as a digital middleman to securely transmit transaction data from the customer’s bank to the merchant’s account.

On the other hand, a payment processor handles the credit card transaction process, authorizing the payment, ensuring funds are available, and facilitating the transfer of funds between the customer’s bank and the merchant’s account.

CBD retailers will need both, and FTx POS provides solutions for both areas.

Why a CBD Credit Card Processor Is Necessary

CBD sellers need specialized CBD credit card processing due to the nature of the business.

Traditional processors might shy away from it due to perceived legal and financial risks, leaving you stuck without reliable payment solutions.

However, a dedicated CBD payment processor understands the industry’s specifics, ensures compliance with regulatory standards, protects against chargebacks, and provides stability for your transactions. By partnering with a CBD-focused merchant services provider, you can safeguard your business, streamline your operations, and focus on growth without worrying about payment hurdles.

Get Started. Choose a CBD and cananbis payment processor. FTx POS offers integrated payment processing with no high-risk fees for CBD and cannabis retailers. Get a rate quote today!

Why You Shouldn’t Use a Traditional Payment Processor for CBD Retail

The issue with traditional processors is their lack of understanding of CBD retailers’ needs. Often, businesses are dropped without warning, funds are frozen without explanation, and there’s a constant threat of non-compliance.

Reasons to reconsider using a traditional merchant processor:

1. Lack of Industry-Specific Knowledge and Support: Traditional merchant processors often don’t have the specialized expertise to understand the unique challenges and requirements of different industries, leading to poor support and service.

2. Sudden and Random Account Closures: Traditional processors can close accounts without warning, causing major disruptions to business operations and cash flow, which can be very harmful.

3. Unexpected Fund Holds Due to Compliance Concerns: Traditional processors might hold funds unexpectedly due to compliance issues, creating financial strain and uncertainty for businesses that need a steady cash flow to manage daily operations.

Worst case scenario with a traditional processor: Your CBD business gets labeled high-risk and the processor drops your business (often overnight). They may also lock up your funds and require you to jump through compliance hoops to get those funds released.

High-Risk CBD and Cannabis Payment Processing: What to Avoid

High-risk accounts come with their own set of rules, which could include:

  • Higher Transaction Fees: Often a result of the added risk taken on by the processor.
  • Reserve Accounts: A percentage of each sale might be held to cover potential chargebacks.
  • Payout Cycles: High-risk accounts can sometimes experience delays in fund transfers.
  • Strict Underwriting: More extensive background checks and business evaluations.
  • Higher Chargeback Rates: Possibly due to the industry’s higher occurrence of transaction disputes.

What to Look for in a CBD Payment Processing Company

Navigating the complexities of cannabis credit card processing requires careful consideration. Here are key factors to look for when selecting a processor:

1. CBD Expertise and Compliance

Choose a provider that specializes in CBD and high-risk processing:

  • Deep understanding of CBD regulations: Ensure the processor is well-versed in the intricate legal landscape of CBD, including state-specific laws.
  • Proven track record: Look for processors with experience handling CBD-related transactions and a history of successful compliance.
  • Ability to adapt to changing regulations: The CBD industry is dynamic; choose a processor that can swiftly adapt to evolving regulations.

2. High-Risk Merchant Account Capabilities

You will likely be considered a high-risk account. However, that doesn’t always mean you will have to pay excessive CBD processing fees:

  • High-risk merchant account: CBD is often categorized as high-risk due to regulatory uncertainties. Verify the processor specializes in high-risk merchant accounts.
  • Chargeback management: A robust chargeback management system is crucial for mitigating potential disputes.
  • Fraud prevention: Advanced fraud detection tools are essential to protect your business from fraudulent transactions.

3. Fees and Pricing Transparency

This is true when selecting a payment processor for any type of business. However, with CBD payment processing, make sure you completely understand all fees:

  • Competitive rates: Compare processing fees, monthly charges, and other costs to find the most cost-effective option. The best CBD payment processors will estimate your monthly savings, based on your existing processing volumes.
  • Clear fee structure: Avoid hidden fees or unexpected charges by opting for a processor with transparent pricing. Examples include monthly statement fees or minimums, as well as “transaction authorization” fees.
  • Scalability: Ensure the fee structure accommodates your business growth and increasing transaction volume.

4. Customer Support and Service

As you look for quality payment processors for your CBD business, test their customer service and support:

  • Responsive support: Reliable customer support is essential for addressing issues promptly.
  • Availability: Check the processor’s support hours and channels (phone, email, live chat) to ensure timely assistance.
  • Knowledge and expertise: Look for a support team with a deep understanding of CBD payment processing.

5. Technology and Integration

Look for specific integrations with systems like POS, accounting software, or ecommerce:

  • User-friendly platform: A simple and intuitive platform enhances operational efficiency.
  • Integration capabilities: Ensure seamless integration with your point-of-sale (POS) system and other business software.
  • Security measures: Robust data security protocols protect sensitive customer information.

Best CBD Payment Processors: Recommendations

If you’re looking for a reliable CBD merchant processor, start with our list, featuring the best providers in the industry.

Up first is FTx POS. Here’s why:

FTx POS offers integrated payment processing. That means we provide POS software, as well as act as your payment processor. Using integrated payment processing for CBD can simplify accounting, improve transaction speeds, and integrate with other POS systems like loyalty or inventory management.

FTx POS also offers third-party payment processing. If you’re happy with your CBD card processor, for example, but need a new POS system, we integrate with some of the top systems in the industry. Additionally, we’ll guarantee great rates – we’ll meet or beat your rate.

Some other providers to consider include:

  • PayKings: Often regarded as a top choice due to its focus on CBD businesses.
  • Easy Pay Direct: A well-established option with experience in high-risk industries.
  • PaymentCloud: Specializes in finding processors for high-risk merchants like those in the CBD industry.
  • Square: Offers CBD payment processing solutions but with specific limitations on product claims.
  • Segpay: Focuses on high-risk verticals including CBD.

Tips for Lowering CBD Credit Card Processing Rates

High-risk processing rates are typically higher due to the increased risk of fraud and chargebacks associated with certain types of businesses. However, these rates are not set in stone and can be negotiated with payment processors.

It’s common to find a difference in fees between traditional and high-risk retail processing.

Traditional Retail Processing Rates:

High-Risk Processing Rates:

  • Typically range from 3.49% to 3.95% per transaction.
  • Generally higher because of the increased risk of fraud and chargebacks.
  • Usually 0.5% to 1% higher than low-risk rates.

Here’s how to obtain better rates for CBD payment processing:

  • Use market research to improve your negotiations by understanding industry trends and competitor benchmarks.
  • Expand your search to include different processors and explore various options to find the best fit for your needs.
  • Demonstrate a solid track record of success, including low chargeback rates and customer-friendly return policies.
  • Stay updated with regulatory changes to ensure your practices are compliant.
  • Use strong financial statements to show your financial stability and attract potential partners or investors.

CBD Merchant Processing with FTx POS

FTx POS offers comprehensive solutions for CBD merchants, whether you need POS integrated payment processing or third-party services.

Here are some benefits of working with FTx POS for CBD payment processing:

  • Competitive Rates: We offer some of the most competitive rates in the industry, ensuring you get the best value.
  • Quick Payout Cycles: Enjoy fast and reliable payout cycles, so you can access your funds promptly.
  • Rate Match Guarantee: We guarantee to match any lower rate you find, giving you peace of mind.
  • Protection Against Chargebacks: Our robust system provides protection against chargebacks, minimizing your financial risk.
  • Integrated Ecommerce Solutions: Benefit from our fully integrated ecommerce solutions that simplify your online business operations.

Interested in FTx Card Payments for CBD credit card processing? Contact us today to schedule a consultation and see a demo!

Interested in FTx Card Payments for CBD credit card processing? Contact us today to schedule a consultation and see a demo! Learn more about our Credit Card Payment Processing Solution.


While there are no specific federal regulations on processing CBD transactions, some processors may have their own guidelines or restrictions. It's important to thoroughly review these before choosing a processor to ensure you can comply with their policies.

It's important to note that hemp-derived CBD products (with less than 0.3% THC) are federally legal but still illegal in some states, thanks to the 2018 Farm Bill.

Due to the legal complexities surrounding the sale of CBD products, many traditional payment processors are hesitant to work with businesses in this industry. This is because hemp-derived products are still considered federally illegal by the United States government, even though they may be legal in some states.

The best way to find a reliable payment processor for your CBD business is to do thorough research and reach out to different companies that specialize in high-risk industries. It's also important to make sure the processor has experience working with CBD businesses and understands the unique challenges they may face.

If your payment processor terminates your account, it’s important to act quickly to avoid significant disruptions to your business.

First, try to get a clear understanding of why the termination occurred by contacting the processor directly. This can help you address any issues or misunderstandings.

Next, start researching alternative payment processors immediately, focusing on those that specialize in high-risk industries like CBD.

Also, think about adding more payment options like ACH (Automated Clearing House Payments) payments, e-checks, or cryptocurrencies. These can act as backups if any issues come up in the future.

To avoid common pitfalls in CBD credit card processing, thorough due diligence is key.

First, work with a payment processor that understands the CBD industry and its risks.

Keep meticulous records and maintain transparency in all transactions to reduce chargebacks and fraud.

Implement strong fraud prevention measures like address verification (AVS) and CVV checks.

Stay updated on industry regulations to ensure compliance with federal and state laws.

Building strong relationships with your payment processor and keeping communication open can help resolve issues quickly.

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Business Experts & Contributors

A New Solution Coming To FasTrax

Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

Content Writer
A New Solution Coming To FasTrax

Matthew Davis is a content marketing specialist for FTx POS. With experience in marketing, brick-and-mortar retail, and ecommerce, Matthew enjoys writing about strategies and technology retailers can use to grow. Previously, he managed retail operations for a sports/entertainment facility and worked in marketing consulting.

Matthew Davis

SEO Specialist/Content Writer

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