Electronic payment processing is a vital part of today’s business world since people are shying away from making cash purchases. However, getting an electronic payment processing service in your business is not very straightforward owing to the way processors categorize certain businesses. The process of accepting payments electronically is long and sophisticated, and the parties involved need to ensure that they are safe from fraud and any other risk facing monetary transactions on the internet.
If you have a business that sells CBD oil, note that it will be regarded as a high risk one. High-risk businesses are those that are considered to be risky to the banks and payment processors due to a couple of factors. CBD oil is not legal in all corners of the world, and one major category of high-risk businesses is one that deals with illegal commodities. If you apply for a merchant payment processing account, most processors will reject your application. What does this imply for you? Should you just give up and stick to selling the oil through cash only? Well, this is not the case since your options might be limited, but you still have a way of going about it. Read on and find out;
Finding A High-Risk Processor
Nowadays, some payment processors have dedicated their services to high-risk businesses, and you can find a couple of them on the internet. They specialize in high-risk clientele and ensure that you analyze all the ones you have in mind before selecting one. Payment processing is a crucial part of your business, and if you choose a rogue processor, it could significantly hinder your business operations and growth.
These processors are simply doing you a favour and do not expect them to offer you the same terms being offered to the regular businesses. One major thing that they will ask you to do is to keep a money reserve for safety purposes. There are three types of reserves you need to have, and they include;
This is a risk management plan that is set by the acquiring bank to protect them from the risks of chargebacks, fraud or any other case that might make them lose money. It is simply a different type of insurance policy against the high-risk nature of your CBD oil business. It varies from processor to processor and depending on what is indicated on the contract; they can decide to keep a specific percentage of the total amount earned in a day for a specified period before releasing the money.
Up Front Reserve
If your CBD oil business is new and the processors have very little history to analyze your application, they could ask you to have an upfront reserve. This can be calculated based on your projected amount of money transacted in a specific period. This reserve signifies the amount that you need to deposit at in escrow at the beginning of the agreement. You could also allow the processor to retain all your earnings until the amount is met and let this act as the upfront reserve.
This is where the acquiring entity keeps a specified percentage of the amount earned until a specific amount is reached. It differs from the rolling reserve in that here, the bank won’t withhold the money continuously, but they will stop when the fixed amount is reached. However, if the money from the reserve is withdrawn for any reason, the processor will start deducting again until the cap balance is attained.
Aside from these reserves, expect to pay more than all the regular businesses. You will be probably paying around two to five percent for every transaction, and the account fees will vary based on the services you need and pricing plan offered by the processors. You need to be aware of this from the word go so that you do not reject a processor offering you excellent service for your CBD oil business with the hope of getting one with lower charges.
Applying For An Account
Most CBD oil businesses try to impress the processors by applying and hiding the details that will increase the chances of them being denied an account. Well, it is better to get rejected by a processor rather than deceiving them and letting them find out about your hidden operations later on. If your payment history is poor, present it to them and show them that you have put up the required measures to make things right. Once your CBD oil business has started to benefit from these electronic payments and the processor revokes or freezes the account for any reason, it can have a significant toll on your business. Always be transparent with them from the word go and everything will fall into place.
Maintaining A CBD Oil High-Risk Merchant Account
When you get a merchant account for your business, do not expect it to be a smooth ride. In some cases, the processor may give you a limit on the number of transactions for a specified period, say for the first month as they monitor your performance. Do not go past these limits as they will make the processor reluctant and only be patient as it will be lifted if you get everything right. Try to minimize the number of chargebacks and fraud cases and show your processor that you have a strong strategy that will help to reduce them. It is terrible to have so many issues with your processor early into your contract as they will become sceptical and could even cancel it.
In conclusion, always figure out your processing needs before you begin looking for a service provider. It can be a tricky process, but it helps you to look at whether you need things such as the credit card terminal, mobile payment station, POS station, e-commerce payment gateway and integration with shopping carts among others. It is bad to pay for services that you do not need for your CBD oil business since they will only make the costs higher and you are already paying more than what the normal businesses do. Finding a payment processing account for your CBD oil business is possible, and all you need to do is to understand your options well so that you land the best deal.