UK CBD Stores still Struggle with Payment Solutions say Fibonatix
31st July 2019, 12:01 pm
According to research by the Centre for Medicinal Cannabis (CMC), the UK CBD market could be worth almost £1bn a year by 2025. But how can any merchant make their business work if CBD payment processing is out of bounds?
We’ve witnessed some incredible market growth in the last year alone. While wellness products are perhaps the most popular offering, CBD has also made its way into skincare, drinks and even pet treats. As a result, plenty of major high street retailers and smaller merchants are starting to stock CBD products online and in stores — yet all could be forced to clear their shelves if payment service providers demand it.
The confusing legal status of CBD payments
Despite the changing legal status and huge demand for cannabis products, retailers around the world are struggling to access payment processing solutions. In the US for instance, Mastercard, Visa and American Express have refused to accept CBD transactions in states where they are legalised. Annoying for the consumer, certainly, but potentially crippling for the business.
Thrive Market recently faced demands from its payment service provider to stop selling products with hemp and CBD immediately, or risk no longer being able to process credit card payments. Similarly, the nonprofit US Hemp Authority was dropped entirely by the payment processing platform Stripe, who claimed the organisation was a liability. While CBD products are a big hit with merchants, CBD payment processing is a very different matter.
While many payment service providers initially entered the UK CBD market, many have since pulled out due to fears around liability and reputation, despite the industry’s legal status in the UK. As a result, many of the CBD businesses we speak with have a fear of being left high and dry without accessible payment methods, causing chaos and uncertainty across the market.
Lack of payment options
Imagine if pharmacies, grocery stores, hairdressers or train stations stopped accepting card payments. There would be an uproar! With contactless payments, mobile transfers and online purchasing behaviors surging in popularity, one in 10 adults in the UK is already living an entirely cashless life, according to research by the banking body UK Finance. There’s no longer a place for cash in the UK retail space, and this lack of CBD payment processing is cutting businesses off from their market.
The majority of CBD and hemp oil products are sold online through eCommerce outlets, yet merchants are especially hampered by an inability to obtain an online payment gateway and merchant account. Payment service providers have been known to withdraw CBD payment processing at a moment’s notice, preventing CBD businesses from being able to accept payments from their customers.
One of the biggest pain points we hear from merchants is the widespread lack of CBD payment options, which often leads them to settle for relationships with less-than-perfect payment service providers. Those still active in the market are often based overseas, with customer support either lacking or being non-existent, and many charge high fees for the privilege, as high as 7%. With such a huge gap between supply and demand, the reality of securing a payment provider rarely reaches even close to expectations.
It’s clear to us that there’s a space in the market for better CBD payment service providers. Merchants need a partner business that can offer industry understanding, reliable service and stability — not to mention more competitive fees. Is this too much to ask? As the UK CBD market looks set to hit new heights, we don’t think it’s likely that the market will stay stagnant for long.