Securing a reliable merchant account can be challenging for businesses operating in high-risk industries like CBD (Cannabidiol) products. Highrisk merchant accounts are designed specifically for companies that face elevated risks, such as increased chargebacks, fraud, or legal restrictions. The CBD industry is one of those sectors that often falls into this category due to the evolving legal landscape and potential for increased fraud.

In this blog, we will dive into what defines a high-risk merchant account, why CBD businesses are often categorized as high-risk, and how companies like Cathedral Payments can assist in providing specialized solutions for businesses in these sectors. We’ll also explore what to look for in a high-risk merchant account provider to ensure your business receives the best service at competitive rates.

What is a High-Risk Merchant Account?

Understanding High-Risk Merchant Accounts

A high-risk merchant account is a type of bank account designed for businesses in industries deemed to carry higher risks for the payment processor or bank. These industries may face higher rates of chargebacks, fraud, and legal challenges, which increase the cost and complexity of processing payments.

Banks and payment processors often classify businesses into “high-risk” or “low-risk” categories based on their industry, product type, and historical transaction data. High-risk sectors are more likely to experience chargebacks (disputes where customers reverse transactions), fraud, and legal complications requiring extra monitoring and resources.

Banks and processors often charge higher fees when a business is considered high-risk to offset the increased risk. They may impose more stringent criteria when approving applications for merchant accounts.

CBD – A High-Risk Industry Explained

Why Is the CBD Industry Considered High-Risk?

The CBD industry has grown exponentially recently, but remains a highly regulated and sometimes legally ambiguous sector. Cannabidiol (CBD) is a non-psychoactive compound found in cannabis plants, and its popularity has soared due to its potential health benefits. However, due to the complex and often contradictory state and federal regulations, the CBD market remains a high-risk industry.

Each state in the United States has its own rules regarding selling, marketing, and distributing CBD products, such as oils, tinctures, edibles, and topicals. This lack of uniformity makes it challenging for businesses to operate across state lines. The legal gray area surrounding the sale and use of CBD products means many companies face restrictions in obtaining merchant accounts.

While state-level legislation has been moving towards more lenient laws, the federal government still restricts CBD sales. As a result, CBD businesses are more likely to have their payment processing accounts flagged as high-risk.

Legal Challenges and Industry Ambiguity

One of the biggest challenges in the CBD industry is the varying legal landscape. CBD products are fully legal in some states and restricted or banned in others. The FDA (Food and Drug Administration) has yet to provide clear, nationwide regulations on CBD, further complicating the situation for businesses and their ability to secure merchant accounts.

Because of these legal complexities, many CBD businesses are forced to operate in a limited capacity. They may also face difficulties meeting the diverse testing standards required in different states, limiting their ability to scale and grow.

What Can High-Risk Merchant Providers Do To Help CBD Businesses?

Solutions for CBD Businesses in Need of Merchant Accounts

Finding the right high-risk merchant provider is critical for CBD businesses looking to process payments. The traditional payment processors used by low-risk industries may not be willing to work with companies in the CBD industry due to its legal complexities and high chargeback risk.

Fortunately, high-risk merchant account providers specialize in helping businesses like CBD companies. These providers offer tailored solutions for businesses that operate in niche or high-risk sectors. Some of the unique solutions that these providers offer include:

  • Instant Approvals: Some high-risk providers offer fast approvals, making it easier for businesses to get up and running quickly.

  • Cash Discounting: Some providers offer cash discount programs to help businesses save money on processing fees by incentivizing customers to pay in cash.

  • Crypto Acceptance: As cryptocurrency becomes more widely used, some merchant providers accept crypto payments, which can help businesses avoid the complexities of traditional banking systems.

At Cathedral Payments, we specialize in providing tailored solutions for businesses in high-risk industries, including CBD. Our team works with each company to create a custom solution that meets their needs, ensuring reliable payment processing without the excessive fees that often come with high-risk accounts.
To learn more about whether your business is considered high risk, check out our article Is Your Business Considered High Risk by Payment Processors? Here’s How to Find Out

What to Look For in a High-Risk Merchant Provider

Key Considerations for Choosing the Right Provider

Finding the right merchant service provider for a high-risk business can be daunting. However, by focusing on the following key factors, companies can make an informed decision:

1. Low Rates and Transparent Fees

Look for a provider that offers competitive rates and transparent fee structures. High-risk businesses often pay higher fees, so it’s essential to find a provider that provides the best possible rates while being transparent about any extra charges.

2. Responsive Customer Service

Reliable customer service is crucial when handling payments. Ensure that your merchant provider offers quick response times and dependable support. In the event of any issues with payments or chargebacks, you want a provider ready to assist promptly.

3. Flexibility and Customization

As every business has unique needs, look for a provider thaflexible solution provider that understands the nuances of the CBD industry will be able to provide services that are tailored to your specific business requirements.

4. Experience with High-Risk Industries

It’s essential to work with a provider that has experience in handling high-risk industries, especially in complex sectors like CBD. Providers like Cathedral Payments have extensive experience working with high-risk businesses and can offer specialized advice and support to ensure smooth payment processing.

Cathedral Payments: Your Partner in Payment Processing

Why Choose Cathedral Payments?

At Cathedral Payments, we understand the unique challenges faced by businesses in the CBD industry. We specialize in offering high-risk merchant accounts with transparent, competitive rates and tailored solutions for your business.

We provide reliable payment processing that helps you grow your business without being bogged down by excessive fees. With Cathedral Payments, you can rest assured that your transactions are processed efficiently, securely, and at the lowest possible cost.

Conclusion: Securing a High-Risk Merchant Account for Your CBD Business

Navigating the world of high-risk merchant accounts can be a challenge for businesses in the CBD industry, but with the right provider, you can ensure seamless payment processing and focus on growing your business. By partnering with a trusted high-risk merchant account provider like Cathedral Payments, you can access specialized solutions that fit your unique needs and ensure that your transactions are secure and cost-effective.

If you’re looking for a high-risk merchant account provider that understands the complexities of the CBD industry, contact Cathedral Payments today. We help you streamline your payment processes and maximize your business’s success.