If you have an online CBD store business, you have considered using Square CBD for your merchant processing. Many business owners immediately default to the major payment processors when searching for CBD payment solutions. It’s understandably common. However, they miss out on specialized CBD merchant accounts that offer more sustainable, long-term options from high risk credit card processors.
Obtaining a Square CBD merchant account can be tricky if you do not know the particular details of the industry. In some cases, your business may qualify for a standard account. But in many circumstances, the legalities and restrictions of selling oils and tinctures online can be an obstacle.
Square Merchant Account – Is It Sustainable?
Presently Square is beta testing their CBD merchant account solution. Only they know how long the beta will last, but it may not be suitable for merchants in the future who want sustainable solutions. Nonetheless, if you want to build your business on certainty, you may want to look for a high risk company like Signature Payments who can fully support your products. Make sure you have COAs that show at THC level beneath 0.3%.
Luckily, there are several tools available to sellers in order to start, run, and grow an online CBD business. In this article, we will break down the ins and outs of the hemp and e-commerce space and compare that information to the Square CBD program.
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Square CBD Payment Processing
On the surface, the Square CBD program for businesses seems to have competitive payment processing rates. They offer custom pricing packages for larger CBD businesses depending on the sales volume and average transaction size. Here is an easy breakdown of the rates Square offers for CBD processing.
|Payment Method||Square CBD Processing Rates|
|Online and In-App||4.2% + $0.30 per transaction|
|In-Person||3.9% + $0.10 per transaction|
|Keyed-In and Card on File||4.8% + $0.15 per transaction|
Accepting Payments For CBD Other Than Square
As you can see, these rates are significantly higher than the rates advertised for lower risk industries. This is because CBD, hemp, and cannabis-related products fall under the categorization of “high risk.” Acquiring banks have determined that certain industries are higher risk due to the chance of high chargebacks, regulations, or even reputational risk, to name a few.
As a result, high risk businesses such as online CBD shops have a more difficult time obtaining merchant accounts. Luckily, there are payment processors like Signature Payments that specialize in providing high risk merchant accounts for CBD businesses.
However, if you prefer to explore your options with Square, there is more to consider regarding long-term payment processing solutions.
Square CBD Features
If you want to accept payments with Square, CBD merchants should consider the features that the processor offers. They offer payment terminals for in-person or card-present transactions.
Payments solutions for selling CBD products have to meet certain regulations. The Farm Bill noted that THC content should be less than 0.3 percent in products. This is consistent with regulations specific to hemp-derived products in the industry. Measures such as these are in place to distance the CBD from its cannabis counterpart. However, as CBD payment processing progresses, online cannabis merchant accounts become more accessible.
Cannabis Merchant Solutions
Selling cannabis online may still be difficult in some states, however, acquiring cannabis merchant solutions in businesses that are considered tier 2 or tier 3 vendors is rather straightforward. These categories are subjective according to the bank that will be boarding your account, but for the most part, they have common qualities. For example tier 2 cannabis merchant accounts involve companies that supply a product to cannabis companies. This could be packaging, testing, or marketing services. In contrast tier 3 cannabis processing is easy to approve and involves products only tangentially related to the business. For example, a shirt company with a cannabis leaf would qualify for tier 3 cannabis credit card processing.
Square CBD Businesses
In conclusion, Square CBD opportunities constantly change with an ever-adapting industry. If you’re a business using Square payment processing to sell items related to CBD, hemp, or cannabis, your best bet is to find a merchant provider that specializes in these industries. Avoid getting your account shut down, and find a high risk merchant account provider. They’ll walk you through the application process and help you get approved for your CBD business fast.
Square CBD Program FAQ
This article is intended for Square Sellers who are currently accepted into or are applying for our CBD Program to support the sale of some hemp-derived CBD products.
You can reference the section below on how to apply for the CBD program if you would like to participate.
Signing Up for the CBD Program
How can I join the program?
If you are not currently in our CBD program, you can apply for our program. If you are new to Square, please create an account using our CBD sign-up page.
If you already have an account, please navigate to Pricing & Subscriptions in your online Square Dashboard to apply for our program under the Optional Programs section.
Once you apply, we will immediately begin our review process and request relevant documentation, such as information about your business, item descriptions, and lab reports for your products. All current and future Square Sellers must apply for the CBD program to be approved to sell CBD.
How quickly will I get approved?
Once you complete an application, your account will be subject to review. If approved, you can begin processing payments after the review is completed.
During our review, we may ask for additional information and documentation. To ensure that your application is processed quickly, please provide the requested information promptly to expedite your review process.
Our team will then reach out to you directly when your application review is completed, which usually takes 2-3 business days.
How will you contact me for more information?
All verification emails or requests for information will be sent to the email address associated with your Square account.
I have a friend who also sells CBD. Can they also join the Program?
Anyone is able to apply to our CBD Program. Refer to the section above, Signing Up for the CBD Program, for more information.
What’s my guarantee that I can continue to process CBD sales on Square? Can I get it in writing?
Square aims to maintain healthful and long term relationships with all merchants, including our CBD merchants. However, we cannot guarantee any given merchant’s ability to use Square. Our ability to continue offering our services is dependent on our relationships with our bank partners and applicable laws.
We recommend merchants familiarize themselves with Square’s Payment Terms to ensure they are not selling prohibited products and services, and promptly and fully respond to any requests for information sent by Square.
Can I leave the CBD program?
If you no longer wish to sell CBD products you may exit the program by visiting the Pricing & Subscriptions section of your online Square Dashboard, and then click Exit CBD Program under the Optional Programs section. By exiting, you attest that you’ve removed all CBD products from your inventory and online presence. You also acknowledge that your account will be subject to deactivation if you continue to sell CBD products outside of our program.
Transactions and Fees
What will my fees be?
Our CBD Program fees are slightly different than our traditional processing fees. All payments processed while participating in the CBD Program, including non-CBD items, will have the following costs:
|Tap, dip, or swipe transactions||3.5% + 10¢|
|Card-not-present transactions||4.4% + 15¢|
|Card on file transactions||4.4% + 15¢|
|API transactions||3.8% + 30¢|
|Square Invoices||3.8% + 30¢|
|Square Online||3.8% + 30¢|
Note: If CBD is only a small portion of your overall sales, you may qualify for a custom rate. To understand how adding CBD products to your business may impact your pricing with Square, please request a quote and then we’ll send you a follow-up email.
Will I have limits or reserves on my account?
All sellers in our CBD Program will have their accounts reviewed for eligibility for our program. As a result of that review process, you may have a payment limit, or rolling reserve, applied to your account in order to continue processing with Square. Our team will reach out to the email address associated with your Square account if a limit of reserve has been applied to your account. We will monitor your account for any potential to change the terms over time.
What bank do you work with?
Square works with multiple federally regulated and licensed acquiring banks.
What CBD products am I allowed to sell?
Square currently allows sellers in the CBD Program to accept payments for hemp and hemp-derived CBD products that have less than, or equal to, 0.3% THC in most states within the United States. If you sell CBD products, including, for example, oil, flower, seeds, lotions, topicals, wax, etc., your business is required to be in the CBD Program. These products must be produced and sold in compliance with applicable law, including, but not limited to, the 2018 Farm Bill, and relevant state laws.
What products am I not allowed to sell?
Square does not allow any sellers to sell marijuana, marijuana derived products, products that contain more than 0.3% THC, illegal drugs, and products that otherwise violate Square’s Payment Terms (e.g. kratom, kava, paraphernalia, bongs, pipes, etc.).
Can I sell hemp flowers?
Hemp flower is permitted only if you provide lab certification confirming the THC level and ingredients. Please note that marijuana sales are not allowed, and Square has no plans to support such sales.
Can I ship CBD products to other countries?
Square does not support payments for CBD products that are shipped to countries where CBD is illegal. You are not allowed to process payments for CBD products that will be shipped to any of the following countries: China, Hong Kong, Iceland, Iran, Israel, Japan, Malaysia, Philippines, Russia, Singapore, Slovakia, United Arab Emirates, and India. If we discover that you are shipping CBD products to any of the above referenced countries, your account will be subject to deactivation.
Can I sell CBD vapes online?
Square does not currently restrict the CNP sale of CBD-only vapes. However, please be aware that we cannot support the sale of CNP age-restricted products, including e-cigarettes (please see Section 3 of the Payment Terms). Additionally, if there are local rules around selling CBD-only vaping products in your business’ jurisdiction, those must be complied with.
What types of information will you need for my application?
Examples of information you will need to have on hand for your application include general information about your business, including but not limited to, transaction amounts, your refund policy, and recent bank statements. You should also have a description of your CBD products, your online store and social media accounts, and a certificate of analysis confirming Delta 9-THC percentages for each item.
If I’m not a CBD business, and carry only a few CBD products, do I still need to be in the program?
If you sell any CBD products, no matter how few, you must be in the CBD Program. However, you may qualify for a custom rate if CBD is only a small portion of your overall sales.
What is Square’s stance on medical claims associated with CBD?
Our program is industry leading, which means we must be extra diligent about ensuring we have a robust CBD Program framework. Medical claims are particularly important for CBD products, so we have strict standards associated with such claims and CBD products. Furthermore, we want our financial system to be fair to everyone, including to buyers.
What can I say, or not say, about my CBD products?
While we can’t provide legal advice, or a list of allowed or unallowed terms or phrases, we built our review process on FDA and other relevant guidelines. For example, we don’t allow any claims that your CBD products may be used to cure, treat, or aid conditions such as anxiety, inflammation, depression, PTSD, ADHD, cancer, or other health conditions. For more information, we encourage you to review the FDA website and warning letters that the FDA has sent to CBD businesses regarding claims made about their products.
What happens if Square identifies a problem with my CBD products?
If we find an issue with your product(s), we’ll ask you to address the issue, and/or remove the item(s), and may suspend your account during this review. If you do not remedy the issue(s), your account will be deactivated.
Furthermore, if we observe continued violations of our CBD policies, the account will be subject to deactivation and future exclusion from the CBD Program.