Cannabis Businesses Need an ACH Provider
Running a business and not being able to take credit card payments can be tricky; however, it is a reality for a vast range of cannabis merchants. Not having a credit card processing account is one of the biggest challenges faced by cannabis businesses, as traditional banks generally don’t support this industry. However, ACH payment processing can be a lifesaver for these cannabis companies.
Benefits of ACH Payment Processing for Cannabis Companies
ACH stands for Automated Clearing House. In simple terms, it is a way to perform direct bank-to-bank transfers. This eliminates the requirement of any credit card processing company and does not require any other middleman. It can also be understood as sending a digital check, which is faster than performing transactions by paper check and, in most cases, cheaper as well. If you are a cannabis merchant and compare credit card processing fees with ACH, you will realize that ACH is cheaper than conventional card processing.
A cannabis credit card processing company generally charges high fees. They typically take a fixed percentage on each transaction. On the other hand, with ACH, merchants pay a fixed amount on each transaction, which translates to significant cost reduction and increased savings. The normal ACH fee for cannabis merchants can range between 25 cents to $1.50.
ACH for cannabis companies is faster than conventional credit card processing or regular paper check transactions. While credit card processing might seem instant, the funds do not immediately reach the merchant’s business bank account. However, with ACH, same-day funds availability is possible.
ACH is cheaper, faster, and more secure. With ACH, transactions are verified at both ends of the process, reducing fraud risk. Cannabis businesses deal with high volumes of money, and the high level of security provided by ACH is a big advantage. Cannabis companies can greatly benefit from secure and compliant ACH processing.
Steps to Choose the Right ACH Provider for Cannabis Companies
While it is clear that ACH can be a wonderful payment processing option for your cannabis business, it doesn’t mean you should go ahead and pick the first solution provider that claims to offer you an ACH account. You need to understand some important factors when choosing a provider.
Key Features to Look for in an Cannabis ACH Provider
The first thing to consider is the provider’s experience in supporting businesses like yours. An experienced service provider will have a system designed to meet the unique requirements of cannabis businesses. The provider should also offer you the ability to accept payment plans and subscriptions. Your goal should be to find a partner that is well aware of the cannabis industry and has customized solutions to meet your requirements.
While we’ve discussed that ACH for cannabis is cheaper than credit card processing, it doesn’t mean that all providers offer the same rates. Some may try to take advantage and charge exorbitant fees. Work with a provider that offers transparent pricing. You should have all the information upfront, with no hidden charges. Ensure that you know the transaction fees, setup costs, per-item fees, and monthly fees beforehand.
Another important factor is the quality of customer service. For many merchants, ACH might be a new concept, and in such cases, you will require assistance from the payment processor frequently. A provider that doesn’t offer around-the-clock customer service can be a costly choice for your business. Ask the payment service provider how accessible their customer service is—do they provide support via email, phone, or both? Do they offer support on weekends as well?
Lastly, ensure the solution provider has the capability to integrate their system with your existing setup. This includes your point-of-sale system, inventory management, e-commerce platform, and salon software. Proper integration with your business software and hardware will make your payment processing experience seamless.
FAQs About ACH Providers for Cannabis
Can ACH provide recurring payment solutions for cannabis subscription boxes?
Yes, with ACH, businesses can easily accept payments for subscription boxes.
How is ACH Bridging the Gap Between the Cannabis Industry and the Banking Industry
It is insane that many cannabis businesses do not get access to bank accounts even if they operate in states where doing cannabis business is legal. This is crazy, and that’s why many of these cannabis businesses do a lot of trade in cash, which is a big hassle. It’s not ideal and is very risky. However, with an ACH merchant account, these businesses can accept payments and send transfers without directly using a bank account.
How Does a Customer Make Payments at a Dispensary via ACH?
The way a customer makes payment at the dispensary for cannabis products using ACH is simple. Rather than giving their credit card number, the customer shares their bank information with the merchant. Most customers find this extremely secure as they don’t have to share credit card details. It also adds a sense of comfort to the customer’s mindset because the money is debited from their bank account and not from a credit line.
What’s the Downside of ACH for Cannabis Businesses?
There are definitely some downsides to using ACH. The first is that ACH transactions are not instant. In some cases, it can take 1 to 2 business days for the money to reach the merchant’s bank account. Another issue is that most of the time, ACH transactions are almost irreversible. It’s really important for the sender and receiver to verify the account details before approving transactions. Good ACH payment processors utilize advanced fraud reduction tools to keep these risks in check.
With some providers, the onboarding time frame might be a little longer than with a regular credit card processing account. However, once it is set up, the transaction processing should be smooth.
