Cannabis Payment Processing

Recreational shop and medical marijuana dispensaries both face challenges because major banks and the federal government present financial roadblocks. Cannabis is a controlled substance on a federal level, so many financial organizations make it extremely difficult for businesses selling marijuana products to safeguard their profits. This article provides the tips you need to maximize profits while mitigating risk.

Cannabis Payment Processing Current Laws

Cannabis is still part of the Controlled Substances Act, so major banks typically won’t process payments for businesses participating in federally prohibited activities, including cannabis and any cannabis-related activities, regardless of state laws. Banks put themselves at risk of being seized by the Federal Deposit Insurance Corporation (FDIC), which is a risk the big financial institutions won’t take. Independent banks are more flexible and willing to cooperate with those related to the legal cannabis market.

In 2014, the Financial Crimes Enforcement Network (FinCen) issued guidance to financial institutions for providing financial services to marijuana related businesses. Banks can provide services to legal cannabis companies, provided they comply fully with anti money-laundering regulations. Regardless, most of the big banks choose to stay clear of the industry. While it’s technically legal for a bank to support a legal marijuana business, many simply choose not to because it’s not worth the risk of more federal government oversight.

The Secure and Fair Enforcement (SAFE) Banking Act creates protections for depository institutions that provide financial services to cannabis-related legitimate businesses and service providers for such businesses, and for other purposes. This bill has moved forward under the premise that the American people have already spoken about legalizing marijuana and the government must enable the commerce required to support it. It’s winding its way through Congress, with a major step forward in March 2019; the House Committee on Financial Services voted to issue a report to the full chamber recommending that the bill be considered further. Only about 1 in 4 bills are reported out of committee. Track the progress of H.R. 1595 SAFE Banking Act here.

The bill prohibits a federal banking regulator from: (1) terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate marijuana-related business; (2) prohibiting or otherwise discouraging a depository institution from offering financial services to such a business; (3) recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; or (4) taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased to such a business.

Cash Only Risks and How to Avoid Them

Cash is great until it isn’t. Gobs of cash require lots of security. Businesses are at higher risk of internal theft, and higher risk of robberies. Any cannabis payment processing solution must include tools to mitigate risk of internal theft. At a minimum, that means a cash drawer that opens and closes based on transaction need, and full tracking by employee of cash sales. With the imminent change in banking laws, businesses need a solution that supports cash and credit cards, in addition to other payment methods.

Accepting Credit Cards for Cannabis

Can merchants accept credit cards for marijuana? No. Any company offering cannabis credit card processing is doing some type of hack that could get your business services shut down instantly if the card networks are fully informed of the activity. It’s only a matter of time and how will that disrupt daily operations? For example, here’s the stated rule in Visa Core Rules, April 2019:

An Acquirer must ensure that a Merchant, Marketplace, Payment Facilitator, Sponsored Merchant, or Staged Digital Wallet Operator does not accept Visa Cards for, or display a Visa-Owned Mark on a website and/or application that is used in relation to, the purchase or trade of photographs, video imagery, computer-generated images, cartoons, simulation, products that claim or imply a similar efficacy as prescription drugs, controlled substances, or recreational/street drugs, irrespective of claims of legality or any other media or activities including, but not limited to, activities listed in Section X.

Tips for Legal Payment Processing in 2019

  • Branded re-loadable stored value cards are the simplest way to provide customers with a cashless experience.
  • Accepting cash, have a solution you can remotely audit, including by cashier details. For example, some lower cost solutions let you delete transactions after the sale; that’s not acceptable. A cloud solution that enables businesses to view all transaction types across multiple locations in or near real-time is best.
  • Be ready to accept EMV chip and pin. New laws are likely to be enacted. With a plug an play solution, add an EMV terminal either standalone or integrated. Note, semi-integrated has inherently greater risk of data breach.
  • Choose a cloud solution that supports all current and future sales channels. This means a payment gateway for in-store and online. Get your advice from a payment professional, not a developer as only the former has the financial expertise to help you understand consequences of choices.
  • Maximize customer fraud protection with in-store EMV chip and pin plus 3-D Secure for online purchases; both shift fraud liability, ‘it wasn’t me, I didn’t authorize’ to the issuer.
  • If you want to surcharge for credit cards to offset the fees, then only choose a solution that supports the proper rules, including the surcharge amount as a separate line item on the receipt.

In my opinion, it’s only a matter of time before the flood gates open for cannabis credit card processing, Congress moves slowly, but there’s enough money and American will to get this done sooner or later. In the interim, a cloud solution that supports other payment methods, with full cashier transparency, and will support future needs like EMV chip and pin, is the best payment processing solution.

The Christine Speedy difference. Don’t get suckered by misleading guidance. Call someone who knows the rules. 954-942-0483, 9-5 ET.

CenPOS Corporate Overview: Payment Processing Engine

This official corporate presentation is a broad overview of CenPOS, an intelligent payment-processing network that streamlines the payment experience for businesses and consumers by using state-of-the-art technology to replace inefficient, outdated payment systems.

View more presentations from 3Dmerchant Services
About CenPOS“Creating efficiencies through payment innovation”Founded in 2009, Miami-based CenPOS is a payment technology provider. CenPOS is committed to providing its customers and partners with innovative solutions for today’s rapidly evolving consumer payment choices.CenPOS is an intelligent payment-processing network that streamlines the payment experience for businesses and consumers by using state-of-the-art technology to replace inefficient, outdated payment systems. The network reflects the core values that drive the experienced and innovative CenPOS team: Simplicity, Scalability, Security and a holistic approach to payment processing strategies.CenPOS provides solutions to a range of organizations including but not limited to retail, card not present merchants, automotive dealers, professional services and academic institutions; special programs are also available for non-profits.

Payment processing emergency back up for disaster

Hurricane Irene is wreaking havoc for businesses with limited phone and internet capabilities who need to process electronic payments. Our hosted payment technology provides the ultimate disaster relief capability because not only can merchants continue to process transactions, but they’ll have business continuity both before and after the disaster. What’s your back up plan?


Before disaster- Dial up terminal > authorization > print receipt which customers signs and you store for at least 180 days, the amount of time allowed for disputes.

After disaster: The use of limited phone line for customer service can interfere with ability to run operations, plus merchant needs power for printing receipts after authorization. More than likely the merchant manually imprints the card data and batch processes at a later date. This increases risk associated with accepting payments, including potential internal fraud and identity theft.

Before disaster with CenPOS technology- hosted terminal > authorization via internet >  customers sign signature capture terminal,  merchant sends receipt to the USB receipt printer, and CenPOS electronically stores signed receipt for retrieval for 7 years, covering both the amount of time allowed for disputes and any IRS needs.

After disaster with CenPOS technology, there are  multiple options:

  • Attach a card reader to mobile device-ipad, iPhone, Droid. Card is swiped and customer signs on the device; a receipt is emailed automatically.
  • Attach a card reader to laptop with satellite internet, and print 2 copies of receipts to the USB receipt printer; one for internal records and one for the customer. The transaction is electronically stored for retrieval for 7 years.
  • Route calls to a temporary call center where operators take orders over the phone. Receipts are emailed to customers. Key entered transactions are automatically routed to meet card not present requirements, with proprietary technology to mitigate risk associated with card not present transactions, and reduce associated payment processing fees. Because CenPOS is an intelligent solution, even if you need to hire unskilled temporary help, you’ll avoid costly errors and mitigate risk because our solution automatically gathers the required data needed and passes it through to the processor.

In every case above there is no disruption to the merchant, who will use the SAME Virtual Terminal for all transactions both before and after the disaster. This simplifies recovery later because all receipts and transaction records remain in the same virtual location, with the exception of any offline signed receipts.