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Three Cannabis Payment Types to Avoid and Why

Cannabis
Compliance
February 28, 2023
Rachel Ludwig

It is critical for cannabis retailers and dispensaries to stay compliant with payments, but not all forms of cannabis payment processing are properly regulated. Reliable and consistent dispensary payment processing that is fully compliant is still a big need for many rising cannabis businesses. So what is required of cannabis payment processors to be compliant

Because cannabis is federally illegal and remains listed as a Schedule I substance, regulated ACH transfers are the most compliant payment method available. There have been recent efforts by Congress to reschedule cannabis and the push for federal legalization is a common topic in the cannabis space, but for now digital bank transfers are a tried and true payment method in terms of compliance.   

Bank-level encryption, fraud prevention and data security are also musts for cannabis payments compliance. Partnership with cannabis-compliant banks such as Safe Harbor Financial and Abaca provide businesses with the comprehensive cannabis banking solutions necessary for secure checkout at dispensaries. 

The rise of digital payments and mobile payment services has created a consumerbase thirsty for convenience. Unfortunately, the tradeoff is that there are some compliance concerns for cannabis business owners. Shoppers are clamoring to know if dispensaries nearby take apple pay or credit cards. Here’s a few reasons why cannabis businesses and consumers should be wary of mobile payment services and peer-to-peer apps for dispensary debit card checkout.      

Apple Pay

Since the start of the COVID-19 pandemic, shoppers have shown a growing preference for making purchases with their mobile wallet or mobile devices. 

Apple Pay is a mobile payment service that allows users to make payments in person with their mobile device or on the web. For Apple users wishing to use their iPhone or Apple Watch for purchases, the service has become a go to choice for in-store, in-app and online shopping. 

Transactions through Apple Pay are made securely through the use of tokenization and bio-metric two-factor authentication. However, If you’re wondering what dispensary takes Apple Pay, the answer is none because it relies on credit card networks. Apple pay dispensary transactions are nonexist at this time. Dispensaries will not accept credit cards while cannabis remains federally illegal. Visa has taken a strong stance with its anti-cannabis policies, and most major credit card companies are following suit

Apple Pay is certainly a convenient way to buy products, but it’s currently not an option at your local dispensary.

Venmo 

Venmo is another mobile payment app to be mindful of. On the scene since 2009, Venmo popularized peer-to-peer money transfers making it easy for users to split bills for dinner, drinks, events, etc. More than half of Americans use peer-to-peer payment apps, and among young adults the usage rate is at 81%. Venmo also has the option of sharing transactions in a community feed, although this can be a concern for cannabis purchases. 

While illicit market sellers may utilize Venmo to collect funds from cannabis purchases, the sale of cannabis goes against the company’s policies. Venmo has expanded into payments for businesses, but that service hasn’t reached the legal cannabis industry as of yet. 

Zelle

Zelle is a peer-to-peer mobile payment app that links directly to a user’s bank account. With Zelle, payments can be made directly between the sender and recipient bank accounts via ACH. However, for business purchases, Zelle has also received some criticism from the U.S. Senate, with reports of rampant fraud, theft, and few refunds for customers. 

Zelle is owned and operated by several of the largest banks in the U.S. including, Bank of America, Chase and Wells Fargo. Unfortunately, these banks are not working with cannabis companies at this time, and much like other peer-to-peer apps cannabis purchases run up against Zelle’s policies. 

A Reliable And Consistent Provider for Cannabis Payments

Surveying the cannabis payment services landscape, it’s a simple conclusion that the most secure form of payment for dispensaries is ACH. ACH payments are regulated and processed to protect all parties concerned. It is no wonder why Cannabis eCommerce is on the rise and cannabis payment processors have become the preferred method for dispensary debit card processing.

Protecting businesses and consumers from fraud, theft and other unforeseen digital payment pitfalls is a major priority for Aeropay. Our cannabis payment processing solutions utilize multi-factor authentication to ensure data security. Thanks to a sophisticated application programming interface (API), Aeropay allows customers to securely connect their banks and send payments to businesses. Secure bank-to-bank transfers is integral to Aeropay’s mission, and the company adheres to regulatory transparency.   

Whether customers are paying in-store, ahead of time at a pay online dispensary, or for delivery, Aeropay creates a fast, convenient and preferred way of handling transactions. Customer retention has been shown to increase 25% when dispensaries use Aeropay, and it’s a proven and compliant payment method for dispensary debit card processing.

Author

Rachel Ludwig

Marketing & PR Lead
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