There is a big difference when it comes to ACH payments (bank-to-bank transfers) and cashless ATM charges when purchasing cannabis. In short – cashless ATM charges might feel convenient because you are able to use your debit card at checkout, but these transactions actually violate federal banking regulations and can ultimately be flagged as possible money laundering payments. Fortunately, secure ACH payments through platforms Aeropay offer both convenience and compliance for customers and dispensaries alike. Here are five key things you should know about the two different payment methods.
Some dispensaries allow customers to pay via cashless ATMs as a more current alternative to cash payments. On the surface, this method appears to be a handy substitute for shoppers who don’t have cash on hand, but a closer look at the statement will reveal a few red flags. First, dispensaries must round up to the nearest denomination of $10, and leave their business name off of the bank statement. These two tactics make cashless ATM charges look like an ATM withdrawal to financial institutions, but misleading banks about cannabis transactions is a considerable risk for customers and the dispensary.
Under the Controlled Substances Act, marijuana is a Schedule I substance that is illegal under federal laws. This means the plant is subject to the most stringent business regulations. While these legal safeguards aim to improve the manufacturing, importation and exportation, distribution and dispensing of controlled substances, the laws are extremely cumbersome for financial institutions and regulated dispensaries. All incoming and outgoing funds must be meticulously documented, or risk being flagged as potential money laundering.
Recently, VISA reminded banks that cashless ATM cannabis transactions, while ubiquitous, still violate the payment processors’ policies. In the near future, mainstream financial institutions may take serious disciplinary measures against cannabis retailers that continue utilizing this non-compliant and high-risk payment option.
On the other hand, ACH payments made with Aeropay are processed through legal and regulated channels that follow national banking and reporting laws. Aeropay is a financial technology company that helps move money electronically via bank-to-bank transfers, processed through the Automated Clearing House (ACH) Network. ACH payments are already widely used – it's the same process as direct deposit or paying bills online.
When dispensaries use Aeropay, they are able to accept cashless payments, giving the same freedom to shoppers accustomed to using debit and credit cards. Fully transparent cannabis payments are powered by Aeropay’s partnership with Safe Harbor, the leading compliance-based banking program for cannabis businesses affiliated with Partner Colorado Credit Union. Also, all payments are backed by a secure financial institution.
Aeropay’s seamless onboarding process also allows customers to quickly set up an account right on their mobile devices. You simply create your account on the Aeropay website and link your bank account –no social security numbers or other sensitive information required. In a matter of a few steps, a purchase can be made without wasting time and money at the ATM.
With an Aeropay account, contactless cannabis payments are possible both in-store and online. When purchases are made in-store, customers scan a QR code that brings up their account and a receipt of the products they’re purchasing. QR codes have become increasingly common since the pandemic, so customer adoption isn’t a concern.
These user-friendly transactions are made possible through Aeropay’s ability to seamlessly integrate into existing point of sales platforms powered by its modern APIs and technology endpoints. Offering digital payments for online orders is especially important as more dispensaries invest in e-commerce platforms. Reports show that more than half of millennials prefer shopping online over brick-and-mortar locations, so catering to this customer base is essential. Using Aeropay for online cannabis payments is exactly like buying goods from other online retail stores – Aeropay accounts can be accessed right from the virtual shopping cart –and even also allows customers to add a tip for delivery drivers.
The fragmented nature of the industry landscape requires regulated cannabis businesses to be meticulous about monitoring state and even municipal regulations –which often requires an enormous amount of time and resources. Fortunately, platforms like Aeropay have proactively obtained regulatory approval in every state it operates in.
The team has done its due diligence by researching each state’s laws and working with financial institutions to earn their trust. Dispensaries’ licenses are verified before partnering with Aeropay, and each payment made on the platform is securely backed by a bank.
Aeropay was designed to put banks, dispensaries and consumers at ease when purchasing cannabis, and the customer experience is where that effort really shows. Unlike cashless ATM charges, customers pay exactly the right amount –without the fuss of additional transaction fees or the merchant rounding to the nearest $10. Even better, Aeropay’s payment portal is accessible from any device. There is no need to download an application or have additional hardware for making purchases.
Ultimately, Aeropay allows dispensaries to overcome the industry’s earliest retail obstacles, such as transaction limits, cash-only operations and unnecessary fees. This not only allows everyday customers to enjoy mainstream retail experiences at their local dispensaries but also increases shoppers’ basket sizes.
Through Aeropay, dispensaries can immediately process payments and mitigate the risk of customer overdrafts since each account is linked to the customer’s bank account, which ensures sufficient funds are available. As a result, dispensaries have more control over their sales and have the ability to void and refund transactions before they're settled.
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