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Debit Card Payments for Cannabis - Cashless ATM Loophole

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Cannabis Payments

Debit Card Payments for Cannabis - Cashless ATM Loophole

What is really happening when a business allows you to make a cannabis related purchase with a debit card.

January 13, 2023
Debit Card Payments for Cannabis - Cashless ATM Loophole


The cannabis industry newswire exploded at the end of 2021 when Visa issued a statement titled “Cashless ATM” and Misuse of ATM Transactions Prohibited. 

In this statement, Visa stated, “Cashless ATMs are primarily marketed to merchant types that are unable to obtain payment services — whether due to the Visa Rules, the fuels of other networks, or legal/regulatory concerns. Therefore, supporting this scheme affects the integrity of VisaNet and the Plus network, as well as the Visa payment system.” This statement indeed was a warning that cashless ATMS were on the verge of being shut down at the end of 2022. 

Cannabis retailers nationwide have been rushing to find an alternative to cashless ATMs given the recent shut down at the end of 2022. Until December of 2022, you would have seen many dispensaries accept debit card payments where totals were rounded to a flat amount and cash was given back to the customer. This was called a cashless ATM and was shut down following VISA’s warning. It was a workaround method that was never compliant and evolved from traditional credit card companies not wanting to touch cannabis due to it being federally illegal.

Processing a transaction for cannabis with a pin debit card violates the payment cards network policies. Every merchant has a merchant ID number identifying the business with the payment processing systems, essentially telling the payment processor where to send money that has been transacted. Along with the merchant ID number, there is a Merchant Category Code which identifies what kind of business the merchant is conducting. 

Since cannabis is still federally illegal, there is no way to correctly identify the business that remains in accordance with payment processing processes. Hiding or masking the transfer of money can raise an alert for potential money laundering schemes, putting the merchant at risk.

How do Cashless ATMs work at dispensaries?

A customer requests $100 at a cashless ATM terminal. After providing necessary security info, i.e., Personal Identification Number (PIN), the terminal dispenses a receipt to the customer. The budtender deducts the purchase total, applicable tax, and cashless ATM fee and returns any remaining change to the customer, still requiring dispensaries to have cash on hand.

Cashless ATMs allow dispensaries to accept debit card payments indirectly. A dispensary customer uses the cashless ATM to withdraw cash from their bank account and purchase cannabis products at the point of sale without handling money for most or all of the transaction. On the consumer’s bank statement, rather than charges appearing as a payment made at a dispensary, the transaction appears as a cash withdrawal from an ATM.

Cashless ATMs permit the processing of cannabis payments with debit cards - which violates card network policy agreements.

Aeropay vs. Cashless ATM


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Accurate Payment Amounts

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Seamless eCommerce & POS Integration

Best APIs and technology end points to allow for a seamless integration.

No Hardware Needed

Aeropay doesn't require any bulky or expensive hardware for customers to pay in your store.

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