Cannabidiol (CBD), a substance derived from the cannabis plant, is considered a “high-risk” item by payment processors. Even though CBD is legal, sellers still face many challenges when trying to process payments due to concerns from banks and processors.
This post will explore why CBD is labeled as “high-risk” and offer a comprehensive guide on how to choose the best CBD payment processor for your business.
💡 Key Takeaways:
- Many processors view CBD products as “high-risk” due to regulatory uncertainty and chargeback risks.
- Businesses should choose CBD-friendly payment processors, evaluate fees, consider integration and user experience, and check services like chargeback management.
- KORONA POS lets you choose your processor and offers industry-specific tools and integrations, making CBD payment processing easy.
What is CBD Payment Processing?
CBD payment processing refers to the methods and services used by companies that sell cannabidiol products to accept credit and debit card payments.
Because CBD businesses are often classified as “high-risk” by payment processors, they typically have to choose a specific payment processor that will handle their transactions.
Why Is CBD Considered “High-Risk” in Payment Processing?
Let’s deep dive into why banks, payment processors, and insurance companies consider CBD “high-risk”:
1. Regulatory uncertainty
While CBD derived from hemp (with low THC content) is federally legal in the US, the Food and Drug Administration (FDA) has yet to fully approve CBD for widespread use. A lack of clear regulations makes payment processors wary of potential legal repercussions associated with processing CBD transactions.
2. Chargeback risks
Customers might not understand the CBD product fully or have unrealistic expectations about its effects. This can result in a higher rate of chargebacks (when a customer disputes a transaction and gets their money back), which is a red flag for payment processors.
3. Reputation management
Payment processors exercise caution in aligning with industries that could damage their reputation. CBD, despite its growing acceptance, still carries some stigma due to its association with cannabis.
4. Limited banking options
Due to the reasons above, many traditional banks are hesitant to work with CBD businesses. Businesses might then have to turn to high-risk merchant account providers, often with higher fees and stricter terms.
Having trouble finding a payment processor for your CBD store?
KORONA POS is here to help! While we’re not a payment processor, our POS software is designed for high-risk businesses like CBD. You choose your payment processor, and we do the rest.
CBD Payments: The Breakdown
Here’s a step-by-step breakdown of how CBD payment processing works, from merchant onboarding to customer checkout and fund settlement:
1️⃣ Apply for a high-risk payment processor
CBD businesses must apply to a processor that supports high-risk industries. The application usually includes business licenses, banking info, product COAs, and website details.
The payment processor then conducts a thorough review of the business to assess risk, check for legal compliance, source products, and ensure no illegal or unapproved products are being sold.
2️⃣ Receive a payment gateway
Once approved, the merchant receives access to a payment gateway that connects their business to the processor. When customers check out, the gateway encrypts the data and securely sends it to the processor for authorization.
If the transaction is approved, the processor captures and holds the payment. Fees are deducted, and the transaction is logged for future settlement and reporting.
3️⃣ Settlement to merchant bank account
Funds are transferred to the merchant’s bank account, usually within 1–3 business days.
Processors monitor activity to ensure the business remains compliant with evolving regulations. High chargeback rates or non-compliance (like making medical claims) can result in account termination.
Learn more about how credit card processing works and save your business money with this free eGuide.
Choosing a CBD Payment Processor: What to Look For
Choosing a CBD payment processor for your retail business requires careful consideration. Here’s what you need to look for in a payment processor:
Processes high-risk transactions like CBD
Many mainstream payment processors, like PayPal and Stripe, do not support CBD transactions. Research payment processors with a solid understanding of the CBD industry and experience processing CBD payments.
Low fees and rates
Consider the payment processor’s fees, including setup fees, monthly fees, transaction fees, and any additional costs associated with integrating the payment gateway with your website or POS system.
Find out how much you’re spending! Use our calculator below.
Review payment processor requirements
The right CBD payment processing provider should have a “TRUE CBD Program” that gathers all the necessary CBD paperwork to verify your business’s legitimacy.
Be prepared to provide a detailed business plan, financial statements, and proof of legal compliance with state and federal regulations. Some payment processors may require a reserve or rolling reserve to mitigate the risk associated with CBD transactions.
Platform integration and user experience
Evaluate the ease of integrating the payment processor with your existing eCommerce platform, website, or CBD POS system.
KORONA POS, one of the best CBD POS systems, protects CBD shop owners from the frustration of payment processor shutdowns. KORONA POS is designed to cater to CBD businesses and offers processing agnostic integration.
POS compatibility
Ensure that the payment processor integrates with a POS system that offers a seamless checkout experience for your customers. Look for options that provide detailed reporting and analytics to track transactions, monitor sales, and identify trends.
Contract length
Some providers require long-term agreements with early termination fees. Flexible, month-to-month contracts offer more freedom to switch processors if rates change or service quality declines. Choose wisely.
Solid customer support
Inquire about the customer support provided by the payment processor, including availability, responsiveness, and industry expertise.
Offers additional services
Consider payment processors that provide merchant account services, which allow you to accept credit card payments directly without a third-party processor. Some processors may offer services like chargeback management, recurring billing, and international payment processing.
Payment processors
giving you trouble?
We won’t. KORONA POS is not a payment processor. That means we’ll always find the best payment provider for your CBD business’s needs.
10 Best CBD Payment Processors
While there are many payment processors available for merchants to choose from, there are few processors who will deal with high-risk accounts. CBD is one of these industries. Most CBD shops, though, will be able to open an account with the three solutions below, all of which integrate with KORONA POS:
1. Square
Square allows CBD sales in the U.S. under the Square CBD program, making it one of the most accessible options for startups. Flat-rate pricing, user-friendly POS, and integration with online stores make it easy to get started.
However, Square’s program is limited to topical CBD (no ingestibles) and you must apply for approval. It’s not ideal for businesses selling full-spectrum oils, gummies, or capsules. If you’d like to learn more about Square, read our Square POS review here.
2. Clearent by Xplor
Clearent works with CBD businesses and helps them get approved quickly by reviewing each business directly instead of going through a third party. They offer tools for both in-person sales and online payments.
It’s a good choice for U.S.-based companies that want reliable service and easy-to-use sales reports. Pricing depends on your business, and their support team is helpful and responsive.
3. Paybotic
Paybotic is a long-time leader in high-risk processing, with deep experience in hemp, CBD, and cannabis-adjacent markets. It offers merchant accounts, POS hardware, and e-commerce gateway setups.
You also get chargeback prevention and compliance monitoring. Great for both online and brick-and-mortar retailers.
4. eMerchant Broker
eMerchant Broker is known for fast approvals and flexible underwriting for CBD, vape, and supplement merchants. Depending on your product type, they offer both U.S. and offshore merchant accounts.
The company provides fraud tools, gateway support, and chargeback protection. Their online application process is fast and user-friendly.
5. Easy Pay Direct
Easy Pay Direct specializes in high-volume CBD e-commerce businesses that need scalability and uptime. Their “load balancing” tech distributes transactions across multiple banks to reduce declines and risk.
It’s a strong option for fast-growing brands that want a reliable and secure way to take payments. Pricing is tailored to your needs, and they offer hands-on help to get you set up.
6. PaymentCloud
PaymentCloud is a full-service processor with a dedicated CBD support team and a reputation for fast approvals. It works with multiple back-end banks to get your account approved.
They also offer chargeback mitigation tools and POS hardware. Integrations include platforms like Shopify, WooCommerce, and BigCommerce are a plus.
7. Inovio
Inovio helps CBD e-commerce businesses accept credit card payments, even if they sell products like oils or gummies that other processors often reject. They work with banks that understand the CBD industry and make it easier to get approved.
You can take payments online or in person, and they also help protect your business from fraud and keep things legal. Inovio is a good choice if other payment companies have turned you down.
8. National Processing
National Processing offers competitive rates and reliable CBD payment solutions for U.S.-based businesses. Their banking relationships help streamline approvals for CBD sellers.
ACH and eCheck options are available for businesses needing alternative payment rails. There are no long-term contracts, making it easy to test.
9. NMI (Gateway Only)
NMI is a powerful gateway—not a processor—that lets you connect a high-risk merchant account to your e-commerce platform. It offers custom checkout flows, recurring billing, and tokenization.
CBD merchants often pair NMI with providers like Paybotic or DigiPay. It’s a great option for developers or businesses with complex payment needs.
10. PayKings
PayKings works with CBD businesses of all sizes, including those selling ingestible products like oils and edibles. They have strong relationships with banks that understand the CBD industry, which helps businesses get approved faster.
They offer payment solutions for both online stores and physical shops, along with fraud protection and chargeback help.
Speak with a product specialist and learn how KORONA POS can power your business.
CBD Payment Processing: Frequently Asked Questions
What is CBD payment method?
CBD payment method refers to the way businesses that sell cannabidiol (CBD) products accept payments from their customers. Because CBD is derived from the cannabis plant, traditional payment processors may not allow CBD transactions.
What does CBD stand for?
CBD stands for cannabidiol, a compound found in the hemp plant. Unlike THC, CBD is non-psychoactive, meaning it doesn’t produce a “high”.
What is the best CBD payment gateway?
The best CBD payment gateway depends on your specific needs and location. Due to federal restrictions on cannabis in the United States, many traditional payment processors don’t allow CBD transactions. It is recommended that you research options that cater to high-risk industries.
Does PayPal process CBD?
No, PayPal currently does not process payments for CBD products.
Connect Your CBD Processor With KORONA POS
While options like Clearent and Square are available to CBD sellers, these payment processors have limitations, so it’s important to carefully compare fees, integration options, and compliance requirements.
KORONA POS is built to support CBD retailers by working with any compatible payment processor. Whether you already have a processor or need help finding one, KORONA POS can guide you through the process. Plus, the system includes tools like inventory tracking to help your business run smoothly.
Speak with a product specialist to learn exactly what you need and how we can help.
