Cannabis Payment processing

The Complete 2023 Guide to Cannabis Payment Processing Solutions


Navigating the complex world of cannabis payment processing can be daunting, especially with the ever-changing landscape of regulations and emerging trends. But fear not, we’ve got you covered with this comprehensive guide to help you understand and conquer the challenges of cannabis payment processing solutions. You’ll discover the current state of the industry, the risks and limitations of cash payments, various digital payment options, and the legal aspects to consider. So, let’s dive in and explore the exciting world of cannabis payment processing!

Key Takeaways

  • The 2023 Guide to Cannabis Payment Processing Solutions covers the current landscape, regulations, industry trends, and security concerns.
  • Digital payment solutions such as ACH transfers, PIN debit & mobile payments provide improved security & customer convenience.
  • Businesses should evaluate providers for the range of services/support offered and pricing/fees to select the ideal solution for their needs.

The Current Landscape of Cannabis Payment Processing

A cannabis payment processing company accepting credit card payments

The cannabis industry is booming, with legal sales reaching $17.5 billion in 2020, showcasing a significant surge from the previous year. However, cannabis credit card processing remains a challenge due to federal regulations, making it difficult for numerous cannabis operators to accept credit card payments. Despite the hurdles, marijuana payment processing options are anticipated to expand, with most states with a licensed cannabis market expected to incorporate payment processing infrastructure within the next decade.

In the fiercely competitive cannabis dispensary market, an efficient checkout experience can set your business apart and boost customer satisfaction. As a result, the demand for dependable, consistent, and compliant cannabis payment services is more significant than ever, especially when working with credit card processors. Bank transfers are projected to remain prevalent, offering recordkeeping and enhanced safety benefits.

Federal Regulations and State Laws

As of January 2023, cannabis is fully legal for both medicinal and recreational use in 21 states, the District of Columbia, and two U.S. territories. However, cannabis remains illegal at the federal level, which prohibits cannabis businesses from accepting credit card payments. The proposed SAFE Banking Act would enable major financial institutions to engage in legal cannabis sales without fear of federal repercussions. Despite these challenges, the cannabis industry continues to grow, with 91% of Americans in favor of federal legalization, which could lead to the development of more cannabis payment processing solutions in the future.

Businesses must grasp the intricate legal aspects of cannabis payment processing for lawful operations and prevention of potential legal issues. State regulations may differ from state to state, while federal regulations are uniform throughout the nation. Cannabis businesses must understand each state’s regulations, which can be tougher than federal ones, and ensure their payment processing solution complies with all relevant laws.

Evolving Industry Trends

With the expansion of the cannabis industry, new payment processing solutions and trends are surfacing to cater to the growing demand. Some of these solutions include:

  • Digital payment providers like Aeropay, have become the preferred payment solution in the cannabis industry.
  • Companies like SMB Global, collaborate with other processing companies and banks to facilitate the establishment of an account that meets businesses’ needs.
  • Integrated payment gateways like Authorize.Net and NMI, which are offered by companies like SMB Global.
  • Proprietary mobile processing systems like Mobile SDK, are also offered by companies like SMB Global.

Bridging the Gap

These payment processing solutions, including cannabis banking solutions, are helping businesses in the cannabis industry streamline their operations and meet the needs of their customers.

Offshore merchant accounts are another solution for cannabis businesses, which may have more lenient underwriting processes and avoid cross-border fees imposed by most credit card associations. As the industry evolves, cannabis businesses must remain informed about the latest regulations and compliance requirements to avoid legal difficulties.

Staying abreast of emerging trends and integrating innovative payment solutions can enable cannabis businesses to outshine the competition and offer their customers a seamless payment experience.

Cash Payments: Risks and Limitations

While cash has long been the primary payment method in the cannabis industry, it comes with its fair share of risks and limitations. Some of the common issues associated with cash payments include cash shortages, processing costs, and security concerns. Additionally, dispensaries are known to hold large amounts of cash, which can pose a significant security risk and make them a target for theft and fraud.

The logistical issues of managing cash transactions can also be a burden on cannabis businesses. These challenges include counting, storage, and transportation of cash. Furthermore, cash payments can be difficult to monitor and may not adhere to state and federal regulations, making it challenging for cannabis businesses to maintain compliance. As a result, many cannabis businesses are exploring alternative payment methods that offer greater security and convenience.

Security Concerns

A cannabis business accepting cash payments with security concerns

Handling large amounts of cash in cannabis businesses presents a range of security concerns. The potential risks include theft and fraud, which can have significant consequences, including financial losses, reputational damage, and legal consequences. To mitigate these risks, businesses should implement stringent security measures, such as surveillance systems, secure storage, and staff training.

Additionally, credit card processing poses a challenge for cannabis businesses due to the risk of losing revenue, having their merchant account shut down, and being blacklisted from the ability to accept credit cards in the future. As a result, many businesses are turning to alternative payment methods, such as debit card payments or eCheck, to provide a more secure payment experience for their customers.

Logistical Issues

Managing cash transactions in the cannabis industry can be a logistical nightmare. Counting, storage, and transportation of cash are some of the more frequent issues that arise with cash payments. Additionally, cannabis businesses that employ cash payments are unable to access conventional banking services, including credit cards, loans, and merchant accounts.

These logistical challenges can lead to operational inefficiencies and increased costs for cannabis businesses. To alleviate these issues, many businesses are exploring digital payment solutions that offer greater convenience, efficiency, and security. By adopting alternative payment methods, cannabis businesses can streamline their operations and focus on providing a seamless customer experience.

Human Error

Human error is a significant concern when handling cash payments in the cannabis industry. Common errors include:

  • Capital loss due to human error

  • Cash theft

  • Inaccuracies in counting and processing cash

  • Bookkeeping mistakes

  • Difficulties in rendering payments

These errors can lead to financial losses and operational inefficiencies, ultimately impacting the success of the business.

To minimize the potential for human error in cannabis payment processing, businesses can incorporate appropriate security protocols, such as cash counting machines, secure storage, and staff training. By implementing these measures, cannabis businesses can reduce the risks associated with cash payments and create a more secure and efficient payment environment for their customers.

Digital Payment Solutions for Cannabis Businesses

In response to the challenges associated with cash payments, many cannabis businesses are turning to digital payment solutions to provide a more secure and convenient payment experience for their customers. ACH transfers, PIN debit, and mobile payments are among the various digital payment options available for cannabis businesses. These payment methods offer numerous benefits, including improved security, faster transaction processing, and enhanced compliance with state and federal regulations.

Embracing digital payment solutions can set cannabis businesses apart from rivals and offer customers a smooth checkout experience. With the continued growth and evolution of the cannabis industry, digital payment solutions will become increasingly pivotal in aiding businesses to navigate the complicated realm of cannabis payment processing.

ACH Transfers

ACH transfers are a digital payment option available to cannabis businesses that provide a secure and efficient way to process payments. These transfers are straightforward, allowing businesses to promptly verify that the funds are present and move directly from the customer’s account to their bank account. However, there are some challenges associated with accepting ACH payments from customers, such as the requirement for third-party solutions and customer registration with the third-party system.

To ensure a smooth customer experience when accepting ACH payments, integration of the POS system with the ACH payment solution is recommended. This allows customers to quickly and easily pay by scanning a QR code. By offering ACH transfers as a payment method, cannabis businesses can provide their customers with a secure and convenient payment option while maintaining compliance with relevant regulations.

PIN Debit

PIN debit is another digital payment option available to cannabis businesses that provide enhanced security and convenience. This payment method utilizes regular debit cards to make cannabis purchases. Customers need to authenticate the transaction by entering their PIN on a PIN pad. While PIN debit offers increased security compared to cash payments, there may be some challenges associated with using this payment solution, such as the need for a compliant point of banking solution and the potential risks associated with non-integrated solutions.

Despite these challenges, PIN debit remains a popular and secure payment method for cannabis businesses. By offering PIN debit as a payment option, businesses can provide their customers with a familiar and trusted payment method while adhering to state and federal regulations. In addition, the use of compliant point-of-banking solutions can help to differentiate cannabis businesses from competitors and attract more customers.

Mobile Payments

Mobile payments are becoming increasingly popular as a digital payment option for cannabis businesses. Offering convenience and security, cannabis payments through mobile devices provide customers with a seamless payment experience. Companies like Dutchie Pay, Cova Pay, and Blaze Pay enable cannabis businesses to accept payments through mobile devices, offering customers a range of payment methods such as PIN Debit and ACH payments for in-store, online, and delivery transactions.

As more and more consumers adopt mobile payment solutions, the demand for businesses to offer these options will continue to grow. By integrating mobile payments into their payment processing systems, cannabis businesses can:

  • Stay ahead of the curve

  • Provide a superior customer experience

  • Maintain compliance with state and federal regulations

  • Ensure a secure and transparent payment environment.

Navigating the Legal Aspects of Cannabis Payment Processing

A cannabis business navigating the legal aspects of payment processing, such as compliance with state and federal regulations

The legal aspects of cannabis payment processing can pose complexities and challenges. Businesses must ensure compliance with state and federal regulations and maintain transparency and legitimacy in their operations. Failure to comply with regulations could lead to a revoked license and substantial financial losses, which could be detrimental to a new business.

To avoid any legal issues, cannabis businesses must:
  • Stay updated with the latest regulations and compliance requirements

  • Conduct regular audits to ensure adherence to regulations

  • Implement robust record-keeping systems to track transactions and maintain transparency

  • Seek legal counsel to navigate the complexities of cannabis payment processing

By following these steps, cannabis businesses can mitigate legal risks and operate within the boundaries of the law.

To help businesses navigate the legal aspects of cannabis payment processing, companies should consider working with payment processing providers that offer compliant solutions, transparency, and expert support. By choosing a reliable and trustworthy payment processing provider, businesses can operate within the confines of the law and maintain trust with their customers.

Compliance with State and Federal Regulations

Compliance with state and federal regulations is a fundamental aspect of cannabis payment processing. Cannabis businesses must adhere to all applicable laws and regulations when selecting a payment processing solution to ensure that they are operating lawfully and to safeguard their business from potential legal complications. This includes understanding the differences between state and federal regulations, as state regulations may be more stringent than federal regulations.

To ensure compliance, businesses should:

  • Thoroughly research the regulations in each state

  • Ensure that their payment processing solution meets all applicable laws and regulations

  • Consult with legal counsel to guarantee compliance

By maintaining compliance with state and federal regulations, cannabis businesses can avoid potential legal issues and focus on providing a seamless payment experience for their customers.

Transparency and Legitimacy

Transparency and legitimacy are crucial components of cannabis payment processing. By selecting a transparent and legitimate payment processing provider, businesses can ensure compliance with legal requirements and foster trust with customers. The advantages of transparency and legitimacy for cannabis payment processing include:

  • Conforming to standards

  • Reducing risk

  • Accessing financial services

  • Instilling customer trust

  • Meeting tax and regulatory requirements

To maintain transparency and legitimacy, businesses should choose a payment processor that offers compliant payment processing solutions, detailed reporting, and dedicated support. This will help ensure that operations are as open as possible, allowing businesses to operate within the confines of the law while providing a secure and convenient payment experience for their customers.

Evaluating Cannabis Payment Processing Companies

Selecting the appropriate payment processing company for your cannabis business can be overwhelming. To make a well-informed decision, businesses should take into account aspects like:

  • Pricing

  • Payment methods

  • User-friendliness

  • Expert score

Additionally, compliance and transparency should be given due consideration when assigning weights to each criterion. By taking these factors into account, businesses can select the best payment processing provider to meet their needs and ensure a seamless payment experience for their customers.

Some of the payment processing companies available for cannabis businesses include:
  • Cova Pay

  • Bankcard International

  • Flowhub Pay

  • ACH Transfers

  • PIN Debit

  • Mobile Payments

  • Instabill

  • PaymentCloud

  • Blaze Pay

  • eMerchant Broker

  • Greet

Each of these providers offers a range of services and support to cater to the unique needs of the cannabis industry. By carefully evaluating each provider’s offerings, businesses can find the ideal solution for their cannabis payment processing needs.

Pricing and Fees

Cannabis cash less atm

Understanding and comparing the costs associated with different payment processing providers is essential in order to make an informed decision regarding which provider is most suitable for your business. 

Payment providers may charge a variety of fees, including:

  • Monthly statement and platform access fees

  • Annual compliance fees

  • Decline fees

  • Support fees

  • Termination charges

These fees can vary from provider to provider. Typical transaction fees charged by cannabis payment processing providers range between 6% and 0.30 per transaction.

While assessing cannabis payment processing companies, it’s important to meticulously review the pricing and fees tied to each provider. This will help businesses understand the costs involved and ensure that they are selecting a payment processing provider that offers competitive rates and transparent pricing. By comparing the costs of different providers, businesses can find the best solution for their needs and budget.

Supported Payment Methods

Assessing the variety of payment options extended by different cannabis payment processing companies plays a key role in choosing the apt provider for your business. Cannabis payment processing companies typically support the following payment methods:

  • Compliant point of banking solutions

  • ACH transfers

  • Debit card processing

  • Cashless ATM (point-of-banking)

These payment methods offer numerous benefits, including improved security, faster transaction processing, and enhanced compliance with state and federal regulations.

By reviewing the payment methods supported by different cannabis payment processing providers, businesses can ensure that they are selecting a provider that offers a comprehensive range of payment options to accommodate their customers’ preferences. In addition, businesses should consider the ease of use and integration of these payment methods with their existing systems, as this can play a critical role in providing a seamless payment experience for customers.

Customer Support and Services

Cannabis customer service

Customer support and services are vital when picking a payment processing provider, ensuring prompt and effective resolution of any technical issues or customer service queries. Cannabis payment processing companies offer a wide range of customer support services, including 24/7 technical assistance by phone, convenient scheduling and support, and outstanding customer service.

When evaluating cannabis payment processing providers, it is essential to consider the quality and responsiveness of their customer support services. This will help ensure that businesses can quickly resolve any issues that may arise and maintain a smooth and efficient payment experience for their customers. By choosing a provider with reliable and responsive customer support, businesses can effectively manage their payment processing needs and focus on providing exceptional service to their customers.


In conclusion, the world of cannabis payment processing is complex and ever-evolving, with a myriad of challenges and opportunities for businesses to navigate. By understanding the current landscape, legal aspects, risks, and limitations of various payment options, and carefully evaluating payment processing providers, cannabis businesses can select the best solution to meet their needs and ensure a seamless, secure, and compliant payment experience for their customers. As the cannabis industry continues to grow and adapt, businesses that stay informed and embrace innovative payment solutions will be well-positioned to succeed in this competitive market.

Frequently Asked Questions

What is a cannabis payment processor?

A cannabis payment processor is a secure, convenient, and compliant solution for processing dispensary purchases such as debit cards, Checks, and e-commerce processing.

What is the best ACH for cannabis?

Cova Pay is the best ACH for cannabis as it is included in monthly subscription fees, and offers both PIN Debit and ACH payments, both in-store and via mobile.

How does a payment processing company work?

A payment processor works as an intermediary to authorize and transfer funds between buyers and sellers by verifying the identities of both parties, sending authorization requests including parameters such as CVV and AVS validation, and forwarding transaction details between the merchant, card network, and issuing and acquiring banks.

What are some common risks and limitations of cash payments in the cannabis industry?

Cash payments in the cannabis industry are often plagued with issues such as cash shortages, processing costs, security concerns, theft, and fraud, making them a risky and potentially costly payment method.

Our team at Upwise Capital is here to assist you with every step of the way to secure whatever funding is needed to help your business grow. If you have any questions regarding how equipment financing works, please call our team at 77-55-UPWISE or email [email protected].  You can also apply online for Credit card processing, so you can get back to work and running your business.

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