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Revolutionizing the Mainstream Financial Landscape

Cannabis
Customer Loyalty
July 17, 2023
Rachel Ludwig

Technology has disrupted nearly every aspect of our modern lives. Now, the technological revolution has its sights set on revolutionizing the way consumers pay for goods and services.

PayTechs (fintech companies using technology to enable more effective forms of payment) are presently valued at over $2.17 trillion – and there’s a reason for this.

PayTech companies recognize the value in making payments fast, secure, and seamlessly embedded within the customer journey. A perfect example is Uber’s recent partnership with Stripe to enable one-click bank payments. The partnership allows Uber customers to securely and instantly add bank accounts without leaving the Uber app.

These closed-loop payment systems are being adopted because they streamline the payment process, and consumers are immediately drawn to the most convenient option. 

The cannabis industry is in a unique position to not only benefit from innovative bank payments, but pave the way for closed-loop payment processing across other sectors.  

What are closed-loop payments? 

A basic example of closed-loop payments are traditional gift cards. Users upload money onto the card to use at a particular store.

This concept has turned mobile with companies like Venmo and PayPal allowing users to link their bank accounts and send money directly to one another.

Closed-loop systems like digital wallets and mobile payments are changing the way we pay for everything – could cannabis be the next industry to be impacted?   

Cannabis has a payments problem

Ask any cannabis retailer, transporter, distributor, or related business, and they’ll all say the same thing about cash management – it’s inefficient, expensive, and downright dangerous.

A lack of traditional banking options has left cannabis companies with limited payment-acceptance options, which frustrates not only retailers, but customers as well. 

The process is vastly different from a traditional experience at Starbucks, for example, where you can use cash, debit, credit, Apple Pay, or even the Starbucks App to pay.

While there are more dispensaries accepting debit card payments than ever, there is often an added fee for customers. Plus, the use of options like credit cards, cashless ATMs, or Apple Pay is either not allowed or borderline illegal.

So what’s the solution to the cannabis payments problem? 

Cannabis consumer demographic breakdown

Millennial and Gen Z cannabis consumers account for 63% of all tracked sales in the US. That’s a massive opportunity to appeal to customers who prefer fast, convenient shopping experiences. 

At the same time, one survey found consumers aged 25-35 are most likely to have made a digital payment (80%). 

There is a clear intersection between the age of most cannabis shoppers and the age of digital payment early adopters. Meaning there is a massive opportunity to intersect the two. 

Closed-loop bank solutions for cannabis

We understand cannabis is ripe with opportunity for a revolution in the way consumers pay. But what’s the best option to introduce?

Closed-loop digital payments serve as a viable solution to the cannabis payments crisis – a customer base already actively uses digital payments and prefers them to cash.

To understand how cannabis can build out closed-loop payments, let’s look at similar solutions in other industries.

Consider coffee giant Starbucks, whose mobile closed-loop payment app has led them to hold onto more customer cash than many banks. Coffee lovers simply add money to their Starbucks account and pay at the store by scanning a barcode on their phones.

The common denominator here is fast and straightforward payment processes. Consumers almost always adopt the most efficient option when presented with a way to save time. 

That’s where the opportunity arises for cannabis businesses. A similar solution can transform the way shoppers pay. 

In a perfect world, cannabis shoppers can prepay for orders ahead of orders, pay at the counter, or pay for delivery orders using digital payments. 

A golden opportunity: Closed-loop payments in cannabis

An intersection of ineffective payment options, plenty of younger shoppers, and a rise in online cannabis shopping has presented a golden opportunity.

Because every legal dispensary in the US shares a common pain with payments, the entire industry can and should adopt closed-loop digital payments.

What could this look like?

Because bank-to-bank payments are compliant in the cannabis industry, cannabis retailers just need an ACH payment service to enable customers to send payments from their personal bank to the dispensary’s bank account.

The primary concern with this option is security. Digital payment providers can be exposed to risk when handling valuable personal banking information. Only a tried and tested solution should be implemented at cannabis dispensaries.

Additionally, there needs to be a movement among cannabis retailers to onboard and advocate for digital payments at dispensaries. Consumers are used to the old ways of cash-only or cash-preferred cannabis retail. Uprooting this system will take time.

In short, now is the time to change the way we pay for cannabis, and the perfect solution is digital closed-loop payments, like what Aeropay offers.

Moving forward, we’ll see more consumers opting to pay with their phones at a dispensary, and the industry will be better off for it. 

Get the cannabis industry’s most effective closed-loop digital payments

Aeropay offers cannabis businesses the most compliant bank-to-bank digital payments available. 76% of customers using Aeropay for online payments use it again the next time for a reason – because it’s fast, convenient, and safe. 

Schedule a demo today to get started with Aeropay’s secure payments for dispensaries.

Author

Rachel Ludwig

Marketing & PR Lead
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