We live in an age where cash transactions are being phased away gradually. People are leaning towards the electronic forms of payment, and if your business does not allow people to pay through these avenues, things can be hard for you. Some customers will actually look at what your competition offers due to this reason. For some time selling CBD, products has been termed to be illegal, but things are changing with time. Researchers have proved that CBD can have some medicinal benefits and this prompted the legalization of CBD products across the country. Businesses selling these products have been seeking electronic payments, and it is essential to understand what is at stake when looking for merchant processing accounts for such kinds of businesses.
What Are High-Risk Accounts?
Dealing in CBD products will make your business a high-risk one due to a couple of factors. High-risk companies are ones that operate in an industry where the risks are high, and the risk of financial failures are also significant. CBD is regarded to be illegal in various parts of the world, and this makes it a high-risk product. The list of high-risk businesses is long, and many businesses do not notice that they fall into that category until they start searching for a credit card merchant account. This poses a problem for such businesses and your CBD oil business as things become harder for you. So how should you go about it and allow your customers to pay for their purchases electronically? Read the information below from The Southern Institute and find out more;
Why Is This Important To Banks?
You might think that this risk is a common aspect in the business world and wonder why banks are so concerned with the high-risk issue. Well, it has been seen that two important matters come into play when banks check whether a business is high risk or not. It is straightforward; no bank will want to work with a company that will make things complicated by proving to be too much baggage for them. Things such as chargebacks and frauds take time to solve and affect the bank even if they arise from issues within the business. This way, they affect the bank’s cash flow, and they would rather stick to the businesses that run smoothly and steer clear of these issues.
If you want to get your high-risk merchant processing account for your business, it is vital to follow some of the mentioned tips. Note that banks are doing you a favour and you need to do all you can to impress them and have them approve your payment processing account. Here are the tips;
It has been mentioned that you should try to impress the banks but do not try to cut corners. It is easy to conceal information that will portray your business in bad light, but this could be detrimental to the company in the long run. You cannot outsmart these systems as they are used to reviewing payment processing applications, and they can quickly detect any monkey business. Fully disclose all the CBD products you sell from the word go so that they can tailor a suitable plan for you if they accept your application. If the processor denies you an account, do not lose hope and keep on trying with the other options and you will eventually get one that is willing to accept your application. Nowadays, some payment processors have come out to help the high-risk businesses, and you could opt to go for them and forget about the conventional ones that will give you a hard time.
Have Enough Resources
One way of convincing the payment processors that your CBD business is credible is by having enough financial resources. These should not be limited to money only but also to the tools, buildings and equipment that is used to generate money for the business. You should also have some considerable amount of money in your bank to show that your company has a steady cash flow. This indicates that your business is doing well and payment processors will know that your establishment can buffer all the financial losses.
Processors will be interested in your previous payment history, and it should be excellent. You could be asked to provide this if your CBD business does not have a lot of capital resources. This allows them to see how your transactions have been in the past and some processors will drop you if they deem it to be too risky. If your payment history is full of chargebacks and fraud cases, you will find it hard to get a processor.
Avoid Preset Limits
Most processors will give businesses dealing with CBD oil a preset limit of transactions that they should process say in a month. This is used by the processors to analyze your payments, and they will eventually lift the restrictions. Do not process payments beyond the set limits as your processor will impose penalties that will affect your business. All in all, adhere to all the instructions that are given by the processor especially during the probation period as it determines whether your application will be eventually accepted or not.
Take Note Of Reserves
High-risk businesses need to set aside a certain amount of money to deal with chargebacks and fraud. Your payment processor can dictate the amount that needs to be kept in reserve, especially when you look at the minimum reserve and take note of this as it could have severe implications on your cash flow. Ensure that the reserve is fine for your business and won’t affect the operations significantly.
Some tips for getting your CBD oil merchant processing account to be approved have been mentioned and once you get it, try and negotiate after a short time. You will have to pay a higher commission than what all the other normal businesses pay, but if you prove to be reliable and negotiate well, the processor could reduce it a bit. All in all, ensure that you find the best payment processor, www.thesoutherninstitute.com for example, as some of them are not good for you.