Cannabis Is Still Illegal… For Now

The currently murky legal status of medical and recreational marijuana dispensaries has led Visa, MasterCard, Discover, and American Express to forbid marijuana payment processing on their networks, leaving merchants without access to credit card processing for medical marijuana. Until this matter is resolved at the federal level, it appears that the major credit card processors will not openly provide merchant services for marijuana dispensaries. This policy has forced most marijuana vendors to exclusively accept cash transactions, limiting payment options for dispensaries and turning their customers and their cash-only locations into targets for robbery.

The State Of Marijuana Banking

As of March 2019, momentum toward legal marijuana banking appears to be gaining in the U.S. House of Representatives. The Secure and Fair Enforcement (SAFE) Banking Act, a bill intended to protect financial institutions that provide services to marijuana businesses, has been passed out of committee and is expected to be scheduled for a house vote within weeks. The bill has the support of the American Bankers Association and would lay the foundation for further legalization efforts by providing a safe way for dispensaries and CBD/hemp vendors to accept electronic payments. A more ambitious proposal for total legalization titled the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act has previously received support from President Trump and may be introduced later this year.

Current Marijuana Payment Processing Options

Some high risk credit card processing specialists have started to offer workarounds that enable merchants to accept credit cards through domestic merchant accounts. We have listed the top providers of marijuana merchant accounts below. Given the firm stance of the major banks, it is probable that these companies are using solutions that rely on loopholes or procedural gray areas in order to process cannabis payments. It is also reasonable to assume that all of these providers offer point of banking systems as an alternative method of card acceptance for marijuana vendors. However, the providers themselves will have more up-to-date information on the marijuana merchant services they provide.

Point of Banking Systems

Some marijuana merchant account providers have found workarounds that do not rely on major credit card processors. Marijuana credit card processing is typically made possible by a service called a point of banking system. This system, also known as a “cashless ATM,” functions in the store as a PIN-based swiped transaction, but the actual processing of the payment is completely different from traditional credit card processing.

When a customer swipes a credit, debit, or ATM card through a point of banking terminal, the terminal essentially acts as an ATM that the customer might find at his or her bank. The only difference is that no physical cash is ever withdrawn from the customer’s account. Instead, the customer must enter a PIN, choose a type of transaction (in this case a withdrawal), and specify the dollar amount being withdrawn. Just as with ATMs, these dollar amounts are in increments of five dollars ($10, $15, $25, etc.). The terminal then prints a receipt for the customer to sign, and the merchant places a copy of that receipt in the register before providing the customer with change to make up the difference. For example, a cashier in a dispensary would hand back $3.20 in cash for a $16.80 purchase made by a customer who selected a $20 withdrawal. This greatly reduces the amount of cash on site, and the swiped payment is deposited in the merchant’s bank account usually within three days.

Generally speaking, marijuana merchant services providers encourage merchants to charge a convenience fee (usually about $0.99) on each transaction to cover the cost of the terminal/processing service. This fee comes at the customer’s expense, so merchants should weigh a customer’s potential irritation with a surcharge against the convenience of offering card payments.

Please note that CardPaymentOptions.com has not assessed the legality of the payment methods offered by the following providers. This list is simply a resource for medical and recreational marijuana vendors who are seeking credit card processors that claim to process sales for the marijuana industry. Merchants are strongly encouraged to research the services offered by these providers before agreeing to process card payments for cannabis through them.