Merchant accounts for hemp businesses are not easy to come by. As a result, most are highly-priced and expensive to maintain, but they are a necessary evil. This article shows you how to choose a merchant account for your hemp business, and where to find one.
What is a Merchant Account?
A merchant account is an account that allows a business to accept card payments directly from its customers. For example, PayPal and Square are well known merchant accounts.
Opening a merchant account is usually easy and straightforward. Most of them will require that you give them your personal information, nature of the business, and proof of residence. However, hemp merchant accounts may have a more stringent KYC process, which is why these accounts are considered high-risk.
It’s worth noting that a merchant account does not hold money. Funds are transferred to a checking account after passing through the merchant account, which takes about 48 hours. Several card payments processed in one day are usually lumped into a single deposit known as a batch.
Hemp used to be outlawed in the U.S., but this changed in 2018 when the Agricultural Act reclassified hemp as an agricultural commodity. Despite this, hemp is closely related to marijuana, which is still outlawed under federal law. Because of this association, many financial institutions are reluctant to deal with hemp businesses, and those that do tend to charge high fees and are considered high-risk specialists.
How To Choose A Hemp Merchant Account
Finding the right merchant account is important for your business, as this will allow you to receive payments from your customers. If your customers are frustrated or unable to make payments, they are likely to buy from another supplier. As a result, it is important to take your time and do extensive market research before settling on the best hemp merchant account for your business.
Here are a few important factors to consider when choosing a hemp merchant account:
- Rates: What are the fees charged for the merchant account? As previously stated, most high-risk accounts cost more than usual merchant accounts, which could mean higher monthly and annual fees. Some accounts will also charge a rolling reserve fee, which means that a certain amount of money is withheld from all your payments until it reaches a targeted amount known as the rolling reserve. The amount set aside will eventually be reimbursed to you, but it could cause cash flow problems initially.
- Nature of contract: Some contracts are very costly, especially when they are long-term. If you choose to close the account prior to the expiry of the contract you will be charged an early termination fee.
- Ease of online payment: Most hemp customers prefer to make payments on the internet. Your merchant account should have a fully supported payment gateway that makes it easy for customers to make online payments.
- Customer support: This is usually an overlooked area but it is very critical. Look at customer reviews to learn about the quality of support that is offered to customers.
We have searched the market and identified four hemp merchant accounts that you should consider. These merchant accounts deal with hemp businesses and are reputable in the industry.
This is one of the best hemp merchant accounts in the industry. Payment Cloud is based in California and it focuses on high-risk businesses. They offer mobile point of sale solutions, phone payments, an online payment gateway, and merchant cash advance.
eMerchantBroker is a hemp merchant broker that is based in California. They offer credit card processing, an online payment gateway, and merchant cash advance.
SMB Global is a high-risk merchant account that is based in Utah. They offer a full range of merchant account services, but they lack a mobile processing system.
Centurion Payment Services
Centurion Payment Services is a merchant account provider that is based in Florida. They offer an online payment gateway as well as a virtual terminal.
Can You Use PayPal As A Merchant Account For Hemp Businesses?
PayPal does not offer merchant services to hemp businesses. In the past, some hemp businesses have used PayPal by hiding the nature of their business. If they discover such activity, PayPal reserves the right to take legal action.