As you most likely know, finding credit card processing for cannabis is tricky. Sure, there are some alternative methods on the market, but not truly credit cards. Payline now resells a solution that has worked with a tier-one bank and the major card brands to collaborate on a complaint and sustainable solution.
Why is credit card processing an issue?
The common thought for why you can’t process credit cards for cannabis is that it is federally illegal. While it is true that the product is federally illegal, that is not why the solutions that have come and gone are shutting down.
The real reason is that the card brands, Visa/MasterCard/Discover/AMEX, are shutting them down based on risk. When a credit card is used to purchase a product, a microloan is extended to the business. Post-transaction, when things like chargebacks or refunds occur, the financial institution that granted that microloan is left holding the bag. This is where high-risk credit card processing comes in. For cannabis, when chargebacks come through on the Visa/Mastercard rails and they find out it was for an illegal product, they do not want the public backlash for having those transactions and chargebacks on their network.
A new compliant solution
Payline is offering a solution that came onto the market within the last 18 months. As discussed above, the card brands do not want to be liable for chargebacks on their network. So, our solution makes themselves liable for transactions on their network.
Take Venmo as an example. When you create a Venmo account, you load money or link your bank account, and then send money to your peers on their network. If a transaction were to be refunded or disputed, then Venmo would be liable for that. This solution works in the same way.
When a consumer walks into a dispensary and wants to pay with their credit card, the store/budtender sends them a text. The text has a 4-digit code to confirm it is them, as well as show their driver’s license. Once they create their account, they load the funds into their text-to-pay account with the store. Because of this, our solution is now liable, and the Visa/MC network stops when the account gets funded.
When set up on the platform, it comes with a terminal to physically swipe the card, or you can key in the card as well. This solution also works in Canada.
Can any dispensary use the solution?
As mentioned above, because the risk is taken on by our solution, there are requirements to stay on the platform. Specifically, too many chargebacks will result in removal. We offer full support and onboarding of the budtenders but do expect that the dispensaries operate the solution correctly.
Is this Sustainable?
We are confident in reselling this solution as a credit card processing company based on the sustainability of the solution. The solution works with a tier-one bank and the card brands to collaborate. Feel free to contact us to learn more about the details.
For more payments news and industry insights throughout the week, follow us on Facebook, Twitter, or LinkedIn
