The CBD business is booming. Though it started out as a niche alternative treatment, it has expanded into a prosperous market. According to 3dcart, experts project the industry to be valued at $2.5 billion by 2022.
The industry has gained credibility thanks to lawmakers and medical researchers. This has led to more people trying CBD products every day.
If you want to profit from this industry, you will need a way to collect payments from your customers. Some financial institutions are hesitant to work with companies that sell hemp and its derivatives.
Here, you can learn more about how Square is helping companies that sell CBD products.
What Is Square?
Square is a financial services and mobile payment company. It offers hardware and software payment products. The company also offers small business services.
It was co-founded by Jim McKelvey and Jack Dorsey, the latter of who co-founded Twitter in 2009. The service went live in 2010. Since then, it has been trusted by millions of merchants and customers alike.
Square lets merchants take payments through a card reader that you attach to a smartphone. It also allows customers to make secure online purchases.
History of Square and CBD Businesses
Like most other payment services, Square was long wary of working with CBD businesses. Its policies prevented any transactions involving the selling and purchasing of these products.
This was due to the laws surrounding CBD. The company did not want to get involved in these transactions to prevent legal ramifications. This is present in an old help article on Square’s Support section of its website. The company made it clear that even though they wanted to give businesses a competitive edge, they couldn’t help the ones that sold marijuana.
The 2018 Farm Bill
In 2018, President Trump signed the Farm Bill into federal law. While the bill covers many different policies, it legalized all marijuana products as long as they contain less than 0.3% THC.
Despite the legalization of the transport and transacting with CBD products, a lot of CBD companies put their growth on hold. The U.S. government was now going to regulate the industry. CBD companies wanted to wait for those regulations to take effect before building a business that may suffer from regulation changes.
All About the CBD Pilot Program
In May of 2019, Square announced it would begin a pilot program for merchants selling CBD online. This pilot program was on an invite-only basis.
Square wanted to offer CBD merchants a way to make business transactions easier to conduct. In a world with a lengthy history of CBD regulation, Square took the chance to make things a little easier.
Even with lawmakers like Senator Ron Wyden and Senate Majority Leader Mitch McConnell advocating for financial companies to support CBD businesses, some companies prefer to stay out of it.
Square capitalized on the fallout of Elavon, Inc., a former domestic CBD payment processor. In mid-March of 2019, Elavon announced that it would no longer serve hemp- and CBD-related businesses. Existing merchants were given 60 days before their accounts were to be closed. Companies began looking for a new way to accept credit card payments. On May 15th, Elavon cut ties with all cannabidiol- and hemp-related businesses.
Square’s pilot program began when all of this was happening. It offered some hope to these CBD companies who could no longer accept credit card payments.
As part of the pilot program, merchants get access to:
- Multiple payment options. Sellers can accept payments online, in-person, or in-app.
- One rate for every credit card. Sellers do not have to pay for different fees on customers’ different cards like Discover and American Express.
- No hidden fees. The company promises no hidden startup fees, monthly fees, statement fees, or hardware leasing fees.
All transactions that pilot merchants conduct are PCI-compliant and data-secured. Square’s risk analysts and data scientists help sellers to provide a stress-free and efficient business environment for their customers.
Square also offers great customer service in the following ways:
- Articles and tutorial videos
- In-house phone support available 12 hours a day
- Seller Community, which is especially helpful in this relatively new niche. Here, sellers can connect with and learn from one another.
Are There Other Ways to Accept Payment as a CBD Business?
The short answer is, yes. There are financial companies willing to work with CBD companies, but none of them seem to live up to Square’s services. For example, Green Payment Processing specializes in collecting e-checks, which limits a customer’s payment options. Companies like PaymentCloud only allow merchants of topical CBD products. Other companies like goEmerchant and Merchant X have costly per-transaction fees and monthly sales minimums.
Square has avoided these faults as it accepts credit cards, has low per-transaction fees, and requires no monthly sales minimums. That’s why CBD businesses are excited about Square’s pilot program.
Square’s pilot program proved successful. On October 3rd of 2019, Square announced it would start accepting CBD merchants regularly. Just like all other sellers, CBD merchants still have to apply. The process is easy to complete. You can sign up online or via the mobile app. You’ll be asked to provide an assortment of personal and business information. Plus, you’ll need to activate your account once it’s approved.
Square’s beta program pioneered a way for CBD merchants to start accepting payments. These sellers are also granted access to other services like inventory and payroll management.
The company strictly enforces that any CBD products sold must be hemp-derived and contain less than .03% THC. Square emphasizes that the sellers, rather than the customers, must be the ones to follow the regulations.
As a CBD merchant on Square, you’ll be paying heftier fees than other users:
- CBD merchants: Online payments cost 4.20% plus $0.30 per transaction and swiped card payments cost 3.90% plus $0.30 per transaction.
- Other sellers: Online payments cost 2.90% plus $0.30 per transaction and swiped card payments cost 2.60% plus $0.10 per transaction.
Despite these hefty fees, Square is making business easier for CBD sellers to conduct in a financial world that’s hesitant to cater to them.