How To Process CBD Transactions for Ecommerce

How to process CBD transactions

How To Process CBD Transactions for Ecommerce

Whether you’re an existing brand or looking to get started, you’ll need to figure out how to optimize the way you process CBD transactions.

Banks and merchant account providers, in general, consider selling CBD online to be a volatile venture.

This is in part due to the inconsistent legal definitions that govern CBD as a substance, and because the industry that processes CBD into a packaged good for consumers is still largely unregulated.

Processing Ecommerce Transactions – The Basics

process cbd transactions

Processing your average ecommerce transactions is relatively straightforward.

However, it’s important to understand the process and the different elements involved if you want to understand how to process CBD transactions, which is not as simple.

Let’s go over the basics…

Payment Gateway

A payment gateway is a tool that securely transmits the online payment data to the processor to continue the lifecycle of the transaction.

Payment gateways also authorize payments for card-not-present transactions, mostly serving ecommerce merchants.

Think of Square, Stripe and PayPay. It’s an online point-of-sale terminal for your business.

Payment Processor

A payment processor executes the transaction by transmitting data between you, the merchant; the issuing bank (i.e., the bank that issued your customer’s credit card); and the acquiring bank (i.e., your bank).

The payment processor also typically provides the credit card machines and other equipment you use to accept credit card payments.

Merchant ID (MID)

Your merchant identification number is an important part of any transaction

When we’re talking about CBD sales, you’ll soon learn that MIDs are a big deal

A merchant ID is a unique code provided to merchants by their payment processor.

Often abbreviated as MID, this code is transmitted along with cardholder information to required parties for transaction reconciliation.

The MID can help identify a merchant when communicating with their processor and other parties.

Software Platform

You need a solution to tie all of your payment management systems together and ultimately facilitate transactions.

Additionally, you’ll want a platform that provides order management, fulfillment, analytics, and flexible billing.

The ability to process CBD transactions isn’t this straightforward, due to the nature of this high-risk industry.

Optimize How You Process CBD Transactions

process cbd transactions

“It’s not just about finding one solid gateway, processor or MID. You need a flexible platform that will allow for transaction routing. This results in better processing protection and the ability to test different solutions with your target audiences.”

– Adam Pivko, Director of Strategic Accounts & Partnerships at LimeLight

When selling CBD online, the name of the game is having a flexible ecommerce platform.

Here’s why…

Your processor and MID(s) are the most important part of the equation.

These are provided by banks that are willing to undertake the risk of operating in grey markets and will be the reason you’re either permitted to sell CBD or not.

There are a few options in the space today, but finding them may be difficult.

And that’s why it’s important to team-up with a company that understands the ins-and-outs of volatile industries.

For example, merchants often like to have backup MIDs in an effort to mitigate the risk of a constantly changing market so that they’re not subject to shutdowns.

Backup Processing Solutions

The need for a backup processor is for when/if your merchant account gets shut down, or the bank you partnered with backs out of the industry.

Case in point – Elavon.

Elavon, which is a payment processing subsidiary of U.S. Bank, notified its hemp and CBD clients that it had recategorized hemp and cannabidiol-based merchants as a prohibited business type and that accounts for such merchants would be closed within 45 days.

Needless to say, when Elavon shut down without much warning, CBD merchants panicked, because if you can’t accept payments, you might as well be lighting money on fire.

Elavon

This is why it’s so important to have your payment processing set up properly, especially in a more volatile industry like CBD. 

Unfortunately, if you rely on the same standards followed by the majority of online stores, you’ll be opening yourself to a number of liabilities that have the potential to grind sales to a sudden halt. 

The lesson to be learned here for online sellers of CBD, is that you should not integrate your website directly to a bank provided gateway.

Instead, you’ll want to utilize transaction routing, which will allow you to continue processing transactions uninterrupted with a variety of onshore and offshore solutions.

At LimeLight, we highly recommend having transaction routing in place as soon as possible, or ideally, prior to making your first CBD transaction.

Many online CBD sellers learned this the hard way when Elevon shut down. Not only were they unable to process transactions, but they also had to re-do their entire site integration with new processing solutions.

The time and revenue lost from an event like this can be crippling, so don’t make the same mistake.

Domestic and Offshore Transaction Processing Options

Selling a product that can potentially still be illegal under FDA jurisdiction makes it harder to get approved for a merchant account.

One of the CBD industry’s greatest challenges, if not the greatest challenge, is simply obtaining payment processing that will allow you to accept credit cards online.

There are a limited number of options consisting of both domestic and international banks that are willing to back the industry. Offshore options have notoriously low approval ratings, and domestic banks are constantly popping up and shutting down 

The main takeaway here for CBD merchants is that it’s surprisingly difficult to figure out what combination will work for your business without prior knowledge or expert guidance.

And of the limited pool of providers that do accept CBD merchants, there are only a few that LimeLight feels comfortable recommending.

Talk to a CBD ecommerce specialist today.

LimeLight has multiple MID resources for the CBD Industry.

LEARN MORE: LimeLight for CBD ecommerce

The Best Platform To Process CBD Transactions

We’ve established that it’s extremely important to have an ecommerce platform that allows you to reliably perform payment processing and mitigate risk.

However, once people realize this, they usually turn to Shopify, which makes sense.

Big name, great company, tons of integrations, etc.

This isn’t to say you can’t use Shopify, but we would recommend you consider other options for a few reasons:

  • By choosing Shopify, you immediately lose roughly 2 percent of your business, because you’ll need to use a third-party processor. Shopify uses Stripe as its default gateway, and Stripe, unfortunately, does not allow CBD sales.
  • Shopify’s checkout system is simple, which works for a lot of companies. However, it’s almost too simple, and in the CBD marketplace, you’ll want a dynamic shopping cart that’s able to perform up-sells, cross-sells, has built-in subscription tools, etc.

You don’t want to be plugging in all kinds of third-party tools and then find yourself in a situation where your infrastructure is so complicated that you can’t rely on your aggregated data.

Why LimeLight Ecommerce is The Best Solution to Process CBD Transactions

LimeLight is the leading CBD ecommerce and billing platform, built to deal with payments from a wide variety of ecommerce merchants.

When you partner with LimeLight to process CBD transactions, you will effectively:

  • Increase your credit card approval rates
  • Understand and forecast your potential earnings
  • Plug directly into your fulfillment houses
  • Track your orders and handle returns
  • Leverage rich customer insights for higher ROI

Payment Processing Tools CBD Merchants Can Rely On

MID Management and Payment Gateways

LimeLight’s powerful ecommerce engine has industry-leading MID management tools, designed for the CBD seller.

The platform supports multiple gateways in a single account, where you can map gateways to different campaigns in order to optimize transactions across different currencies and discount rates.

Desperate CBD merchants have tried using PayPal as a gateway, but this strategy inevitably involves being dishonest about the nature of your business, and providers won’t hesitate to shut you down the moment you cross their decline threshold.

The consequences here can result in seized funds and a bad merchant history.

For more information on how to obtain reliable CBD merchant accounts, watch thisWebinar – Payment Processing for CBD Merchants

LimeLight and Square

process cbd transactions LimeLight and Square

In order to provide customers with the best processing for CBD transactions, LimeLight has teamed up with and created a direct integration with Square.

Square offers best in class credit card encryption security before transaction transmission.

This helps merchants reduce payment liability and support payments compliance.

Some other great benefits you’ll have with Square are:

– Low costs (only one fee, and no gateway fee)
– Ability to process any payment type, in any country
– Tailor-made payment tools for different industries

In addition to Square, there are many payment gateway providers out there for you to choose from, but LimeLight has multiple partners that are PCI DSS Level I white-label platforms with robust capabilities.

Most notably however, LimeLight is one of very few platforms that bridge the Shopify + Square gap, allowing you to process CBD transactions using Square and a Shopify front-end

Reliable and fair ecommerce for CBD

Unlike Shopify, LimeLight charges no fees for using third-party processors.

Additionally, by teaming up with all the right partners to mitigate risk and maximize revenue in volatile industries, LimeLight significantly reduces the chances of being removed from different service provider platforms.

Get Started Optimizing How You Process CBD Transactions

Want to learn more?

Check out LimeLight’s website specifically made and priced for our CBD industry clients

Or give our CBD onboarding team a call during office hours (9am – 5pm PST) at 415-423-3444