Cannabis payment processing is slowly gaining traction at dispensaries as new technology and processes emerge. However, without federal banking reforms or cannabis legalization, credit card use at dispensaries remains challenging. Debit card processing is much more common, and BLAZEPay provides options for both debit card and credit card payments using the customer’s PIN. But the fact remains that without implementing routine credit card acceptance, the entire cannabis industry is placed at a disadvantage as customers are far less likely to make a spontaneous point of purchase decisions. A good example is a customer going to a CVS or Walgreens with a pre-planned shopping list and trying to calculate how much cash to bring, including the tax. For a basket full of goods, this would probably include a stop at an ATM to withdraw enough money. In a dispensary, a cash-only system not only results in fewer potential cannabis sales, but it also creates security risks due to the volume of daily cash transactions.
Armed security guards are part of nearly every dispensary, and no matter how friendly the guards are, guns do not convey a relaxed shopping environment. Without a doubt, armed security guards are needed to dissuade potential criminal activity, but cannabis payment processing systems go a long way in reducing the amount of cash on hand. Thankfully, BLAZEPAY provides Point of Banking debit card processing that fully integrates with the BLAZE Retail Point of Sale (POS) platform.
What’s the Point of Banking?
Point of Banking systems, also known as a “cashless ATM” enable customers to use their debit or credit cards by making pin-based withdrawals from their accounts. However, no cash is actually provided. A receipt is generated that communicates with the POS system. If a sale comes to $87.50 and the customer withdrawals $90.00 they receive $2.50 cash from the budtender. BLAZEPAY also provides tipping options for budtenders, so most don’t have issues with electronic Point of Banking transactions.
A Point of Banking system provides a seamless way to accept payment at a dispensary. From the customer’s perspective, the payment process feels like a normal, everyday transaction. They swipe or insert their card into the small BLAZEPAY device on the counter, enter their personal pin number, and then specify the amount in $5.00 increments such as $10, $15, $25, etc., similar to an ATM session. The POB terminal then generates a customer receipt and a copy is placed in the register by the budtender. Change can then be given as needed. Merchants can choose whether the customer incurs a transaction fee or to take that charge as a cost of doing business.
Hoops, Fires, and Risks
You may have heard that cannabis remains illegal under federal law. This presents inherent banking challenges because major banks and credit card companies must follow federal laws and regulations. In fact, credit card companies do not provide a merchant code for cannabis transactions as their policies do not permit cannabis purchases. There are of course “grey market” methods for cannabis credit card processing but these “workaround” methods carry inherent risks. A dispensary owner may open a bank account without informing the bank of its true nature, or perhaps list the parent company of the dispensary. Merchant codes are then used for wellness products, supplements, flowers, or other product codes that would be expected with the purported business. If the bank grows suspicious and learns the true nature of the dispensary, the bank could terminate the merchant account along with credit card processing for cannabis sales. It’s pretty clear cut as a Visa® representative reportedly informed Creditcard.com that “Transactions in the U.S. involving the purchase or trade of marijuana are not permitted on the Visa network, until such time as federal law allows.” This means that merchants must jump through many proverbial hoops or put out fires to avoid having a bank close their merchant account. In this environment, it’s not unusual for the company to have a dormant backup account which they can quickly activate if their current account is terminated.
Most states are fully aware of these conditions but cannot change federal banking regulations regarding cannabis sales. This, in turn, puts the dispensary and the cannabis community at a disadvantage for missed sales and maintaining accounting records. BLAZEPAY provides a robust marketplace solution without any shades of grey by accepting all major debit cards with no barriers for customers. On the recordkeeping side of things, all payments have a corresponding transaction ID linking each deposit to specific transactions ensuring compliance with the “Know Your Customer” and “Anti-Money Laundering” regulations.
Federal cannabis legalization or banking reform most likely won’t happen until 2021 at the earliest. So stop burning through cash and get started with BLAZEPAY! Your customers will love it as will your financial teams. Finally, customers don’t have to worry about having enough cash with them, and if they want to make a spur of the moment purchase, nothing is stopping them.