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The Truth About Pin Debit Payments

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Cannabis Payments

The Truth About Pin Debit Payments

The truth about pin debit payments

January 30, 2024
The Truth About Pin Debit Payments

In July of 2023, Mastercard asked banks to stop processing cannabis related transactions made through debit cards on their network.

PIN Debit obfuscates transaction coding in broad daylight:

  1. Cardholder presents the debit card: When purchasing at a point-of-sale (POS) terminal, the cardholder inserts the card into the reader.
  2. Merchant initiates the transaction: The merchant sends a payment request to the cardholder’s bank (the issuer) through an available debit network (e.g., Visa, Mastercard, or other networks).
  3. The Cardholder enters a PIN: To authorize the transaction, the cardholder enters their unique PIN into the keypad, and the transaction is processed.Up to this point, there is nothing unusual about the transaction until you look at how the PIN Debit processor codes it. MCCs (merchant category codes) are used to identify the industry that a receiver of card payments is in. PIN Debit providers tout that the MCC code 5912 is compliant to utilize in the United States for legal cannabis transactions, but this statement is inaccurate. 5912 was created for traditional drug stores & pharmacies and has recently been considered the appropriate code for legal cannabis transactions in Canada (where cannabis is federally legal) but not the United States (where cannabis is not federally legal).Here is an excerpt of the guidance from Mastercard’s quick reference booklet (pg. 123):

‍Aeropay uses ACH - a much simpler, transparent solution:

  1. Aeropay’s ODFIs are specialized in serving the legal cannabis industry, where all onboarded merchants must meet the enhanced diligence required to accept payments via Aeropay.
  2. Once merchants are onboard, their users are encouraged to create Aeropay accounts by securely connecting their bank to their profile. The Aeropay marketing team will assist in driving adoption at your business!
  3. When users transact, they will always pay the intended amount (no round-ups) with no fees enforced by Aeropay. The entry for each transaction on their bank statement will display the merchant’s operating name (DBA).

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