CBD Merchant Account Guide: Payment Processing, Fees & Approval
A CBD merchant account is a specialized credit card processing solution for businesses that sell CBD products. Such accounts are provided by higher-risk payment processors. With the right CBD payment processing account, merchants can accept multiple payment methods like credit cards, gift vouchers, and digital wallets.
The CBD industry is expected to grow at a very fast speed. As per a well-known market research company, Mordor Intelligence, the global CBD oil market will reach USD 21.87 billion by the year 2030 with a CAGR of 15.65%. They expect that the fastest-growing market for CBD products will be North America and the largest market will be Asia Pacific. Source (https://www.mordorintelligence.com/industry-reports/cannabidiol-market)
While overall it may appear that everything is going well for the CBD industry, in reality it’s not a rosy picture everywhere. Sponsor banks and payment service providers consider CBD, hemp, or any cannabis-related product as risky. This classification results in extensive struggle for CBD companies when it comes to getting a merchant account.
While low-risk processors mostly shy away from even evaluating the application of a CBD oil company, specialized high-risk CBD merchant account providers offer such approvals almost daily. For CBD merchants, it may be hard to find those specialized sponsor banks and PSPs.
This is where QuadarPay comes into the picture. Our team has multiple years of experience in working with struggling merchants from high-risk industries. Actually, it will not be wrong if we claim that we are the high-risk payment processing experts.
Our partnership with a registered high-risk payment processing institution works as the foundation for these amazing solutions that we offer to merchants. The CBD merchant account experts at QuadraPay have written this guide for you. It discusses various factors related to CBD payment processing, such as why CBD is high risk, how to get an account, features to look at , pricing structure, KYC requirements, and the application process. We are sure that this guide will provide exceptional value to you. Let’s begin.
Why CBD Merchant Accounts Are Classified as High Risk
There are many reasons why traditional processors consider CBD payment processing as a high-risk activity. Some prominent reasons are listed below for your understanding.
Hemp CBD Connection
CBD oil contains THC. There are regulations that limit the percentage of THC in CBD oil for it to be legally sold. If the CBD product being sold contains THC over the prescribed percentage, then the processor and the merchant may face serious fines. Many low-risk processors are inexperienced in evaluating complex laboratory COAs and simply avoid CBD merchants.
Credit Risk for Banks
Another challenge with the CBD industry is the risk of high chargebacks. Because of marketing hype, many people believe that CBD oil can have quick results and can have health benefits. Customers may file chargebacks if they don’t get the desired result. Many CBD oil websites offer subscriptions. Some customers forget that they ever accepted the subscriptions, and this may result in chargebacks. Sometimes CBD oil shipments get seized because of changes in regulations. This can lead to shipping delays. In some cases, customers may buy CBD oil and later think they bought something illegal and may panic and initiate cancellation. All these reasons make the CBD oil industry risky for credit card processors.
Complex regulations
The regulations surrounding CBD products are volatile and vary based on state and nation. This is why it is complex for underwriters to approve such accounts. Credit card processors have to ensure that merchants comply with local and international regulations. If the underwriters miss any red flags and onboard the wrong merchant, then it can result in heavy fines.
Reputational risk for banks
For banks, credit card processing has always been an off-balance activity. In reality, many banks find credit card processing to be a risky side hustle. In such a scenario, whenever a bank starts offering credit card processing services, it prefers to work with merchants that have no reputational risk. Associating with industries like CBD, vape, tobacco, cigars, and adult entertainment can have an impact on a bank’s reputation. For example, a bank that majorly works with healthcare companies may not like to be associated with CBD or vape businesses.
High-risk merchant accounts with lower fees
CBD Merchant Account Features, Benefits, and Payment Options
High-Risk CBD Payment Processing
Low-risk processors say no to CBD companies because of the high-risk classifications, changing laws, and strict regulations. A specialized CBD merchant account is made to work for this kind of business. Low-risk processors may offer same-day setup just to shut them down later.
Full Credit Card & Alternative Payment Support
With dedicated CBD payment processing accounts, you can accept almost all types of credit and debit cards. It also supports a variety of alternative payment methods like ACH, e-check, and cryptocurrencies. Your customer will be able to choose the way they wish to pay you. It improves the buying experience and also results in better conversion.
Recurring Billing Capabilities
Many CBD companies offer subscription boxes, refills, or monthly plans. These merchants can set up automatic payments by using the subscription payment facility. By using the recurring transaction method, customers do not have to visit the merchant every time to order manually. This way merchants can establish a solid revenue stream.
Easy eCommerce Integration
CBD merchants use a variety of ecommerce platforms like Shopify, Wix, Square, BigCommerce, and WooCommerce. It is important to ensure that the payment service provider integrates well with the e-commerce content management systems used by the merchant. With ready-to-use integration, merchants can easily add the payment solution to the website. A smooth checkout experience means fewer abandoned carts and more sales.
Chargeback & Fraud Protection
As discussed earlier in this guide, the CBD industry attracts chargebacks for many reasons. Specialized CBD payment processors use tools that help identify and stop fraudulent transactions, and it results in better chargeback control. Most CBD merchant services companies allow integration with popular chargeback alert services. Such integrations help merchants protect their money and maintain the account in good standing.
Better Regulatory Compliance
CBD merchants are supposed to meet certain legal conditions, including restrictions on the percentage of THC. Along with that, CBD merchants are also required to follow strict marketing guidelines and shipping limitations. All this is properly evaluated and regularly monitored by specialized processors. The constant monitoring helps processors to keep accounts under compliance. A good processor informs the merchant about upcoming regulatory changes that can have an impact on the merchant’s processing abilities.
Multi-Currency International Processing
Many CBD oil companies ship to international locations. An experienced payment processor ensures that merchants get the ability to accept payments in foreign currencies. This helps merchants expand the business to other countries.
How to Apply for a CBD Merchant Account
For any CBD business, it is important to understand the onboarding process. It helps the business owner stay prepared throughout and ultimately increases the chances of getting a “yes” from the CBD payment processor.
The application process for a CBD merchant account starts with the initial consultation. In this step, you contact the PSP and discuss your requirements. The processor will recommend available solutions and next steps.
You will submit a completed application form along with KYC documents. The underwriting team will review your application and evaluate all the documents as per compliance requirements. After a successful evaluation, you get a merchant account contract to sign. Upon signing the agreement, you will receive login credentials for the payment gateway.
Once the integration is complete, you can perform some test transactions. After that, your account will be switched to live mode to accept real-time transactions.
Timeline for CBD Merchant Account Approval
We will be realistic here. A good and dedicated CBD merchant account may take up to 10 business days for approval. The timeframe can vary depending on the merchant’s preparedness, risk profile, and policies of the acquiring bank. Here is the detailed breakdown of the timeline.
Fast-Track Approvals (2 to 3 Business Days)
While in many cases the approvals can take 7-10 days, for prepared merchants this can happen within 2-3 days. To get approved in such a short time frame, the merchant should have all required documents. The website should be fully compliant before applying. The merchant should be working with an expert CBD payment processor. Merchants should not make any unverified health claims. This way one can achieve quick approval.
Regular Timeline for Approvals
Initial Review (1 to 3 Business Days)
This is the first step, where the payment processor reviews your application. During this stage, the processor checks for basic completeness and eligibility. This includes checking the type of CBD products being sold on the merchant’s website, the business structure, website compliance, and initial KYC review. The provider will request documents that are unclear or missing. To avoid delay, the merchant must immediately supply the requested information.
Underwriting (3 to 5 Business Days)
This is the most critical stage in the entire process. The underwriters carefully evaluate the risk profile of the merchant. For regulated industries like CBD, vape, and tobacco, the review is rigorous. This is because of the industry’s legal gray areas and compliance concerns. Underwriters will check the business model, chargeback history, financial stability, compliance with state , federal, and international laws, lab reports for products (COAs—Certificates of Analysis), marketing claims, and labeling practices.
Integration & Setup (1 to 2 Business Days)
After the approval of the account, the technical team will initiate the integration process. The merchant chooses the best integration mode, which can be either via API or ready-to-use plugins. The merchant may use the gateway provided by the acquirer or use other gateways like Authorize.Net or NMI. The merchant performs some test transactions. Most providers offer an online training session so that the merchant can explore the features of the dashboard.
CBD Credit Card Processing Fees: What Merchants Should Expect
There are various challenges associated with processing credit card payments for CBD companies, and these can influence the pricing. Rates are generally higher than regular low-risk industries. Merchants should understand how pricing works, as it can help them to negotiate better.
Interchange + Markup Model
Most CBD oil merchant processors prefer to follow an interchange-plus pricing model. Here interchange fees can be considered as a baseline that cannot be negotiated. These are the fees that are set by card companies and go directly to the bank. On top of the interchange fee, the processor adds a markup. This fee covers the processor’s operational cost and profit. As our partners operate on a very small, transparent markup, it results in merchants getting highly competitive rates. Remember, being high risk does not mean that you have to overpay, especially when you are working with a CBD payment processing expert like QuadraPay.
Key Factors That Affect CBD Merchant Account Rates
There are many factors that can influence the rates offered by the payment processor. Let us explore a few of these.
Product Type & Risk Level
The type of product you sell can impact the perceived risk. For example, CBD tinctures and edibles can be considered more risky than skincare products. If your products are closer to the border regulatory grey areas, then you must expect higher pricing.
Compliance & Documentation
Any merchant that has clear and fully compliant product labeling, valid business licenses, lab-tested products (COAs), a clean website with disclaimers and age verification, and no political exposure can expect better rates.
Processing History & Volume
Merchants that can present a solid 6 months of processing history with consistent volume and low chargebacks can expect the best rates. With such merchants, the payment processing company can evenly spread the risk. Despite operating in a high-risk industry, such merchants are loved by all processors and can negotiate well for better rates.
Before signing the merchant account agreement, you should carefully read and review all terms. You should especially look for terms related to early termination, batch fees, and statement fees. By carefully evaluating the agreement, you can avoid many hidden fees. If any term is not clear, ask the provider to explain it in a simpler way.
CBD Merchant Account KYC Requirements & Documentation
When you apply for a CBD merchant account, you will have to submit an application form and certain documents. The payment processor will review these and then decide about approval. Let us explore some of the most important KYC documents required by CBD merchant services companies.
Merchant Account Application Form
This form gives the overview of your business. It generally includes details like business name, address, structure (LLC, Corp, Sole Proprietor, etc.), ownership details, product types, and sales forecasts.
Business Registration Documents
This document proves that the merchant is legally registered and is approved to perform business activities. The merchant can provide a certificate of incorporation, articles of association, and operating agreements (for LLCs).
Certificate of Analysis (COA)
COA is the lab report. It verifies the content and safety of the CBD products. A COA includes product name, batch number, date of analysis, THC percentage, pesticide percentage, heavy metal percentage, and testing laboratory’s name and accreditation details. The COA should be from any ISO-accredited lab and must not be older than 6-12 months.
Domain Ownership Proof
The merchant must prove domain ownership. For this, the merchant can share the domain purchase receipt or a WHOIS database screenshot. The domain should be owned by the company or the UBO.
Personal Identification & Financial Documents
Other documents that you will have to share include a bank statement, photo ID, utility bill, and voided check.
CBD Merchant Account FAQ: Common Questions Answered
What is the MCC for CBD products?
There is no specific Merchant Category Code (MCC) for CBD products; however, depending on the type of product, the MCC can vary. For example, CBD oil and food products may use MCC 5499, which is classified as miscellaneous food stores. If you sell CBD cosmetics, the merchant processor may suggest MCC 5977. The MCC used for merchants selling CBD e-liquids for vapes is MCC 5993.
Is CBD legal under federal law?
Yes, hemp-based CBD products containing less than 0.3% THC on a dry weight basis are legal in the US. Some states may prohibit CBD products entirely or may require additional licenses or regulate the form in which CBD can be sold. In simple words, it’s legal but complex, and that makes payment processing hard for CBD businesses.
Why Square, Stripe, and PayPal Do Not Support CBD Merchant Accounts?
Most low-risk processors classify CBD as “high-risk.” This is mostly because of regulatory scrutiny and perceived chargeback risks. Sometimes even fully compliant merchants get flagged or terminated without warning by many low-risk providers.
What makes CBD a “high-risk” industry for payment processors?
CBD is tied to complex FDA/FTC advertising restrictions and evolving state/federal laws. Most processors fear about the risk of liability because of “health claims” and compliance issues.
Can Quadrapay help my CBD business get a payment processor?
Yes. Quadrapay specializes in high-risk merchant accounts. We partner with acquirers that understand CBD and offer stable, long-term processing solutions.
Will my approval be guaranteed?
No provider can guarantee approval. However, because Quadrapay works with multiple acquiring partners that actively accept CBD merchants, those chances are potentially very high.
What payment methods can I accept with a high-risk account?
Most CBD, hemp, Kratom and Delta 8 merchants accept credit/debit cards, ACH, eChecks, crypto, or alternative wallets. The availability of payment instruments depends on the merchant’s risk profile and industry.
Are the fees higher than traditional processors?
CBD merchant accounts have slightly higher rates. Sometimes even rolling reserves are applied. But for the best-profile merchants, rates can go as low as IC+1.5%.
How long does setup take?
If documents are complete and the website is compliant, then you can expect approval in 5–10 business days.
Can I still use Cash App, Venmo, or PayPal for CBD?
These services are not CBD-friendly. Some merchants try, but most accounts get frozen. High-risk merchant accounts and High risk echeck processing are safer options for CBD.
Does Quadrapay only work with CBD businesses?
No. we support many high-risk industries (nutraceuticals, coaching, SaaS, debt collection, adult, travel, etc.) in addition to CBD.
Why is it so hard to get a CBD payment processor in Germany?
Even though CBD related laws are easing this industry still falls into the “high-risk” category. Many low risk processors limit coverage to certain German federal states or even suspend accounts due to compliance uncertainties.
Are there volume requirements for CBD processing?
Yes. Many high-risk providers require minimum monthly processing volumes of $10K. This is done to maintain accounts and reduce fees. However, we also support startups with low volume.
Can Quadrapay integrate with Shopify or other e-commerce platforms?
Yes, you can connect your cbd ecommerce store to processors compatible with Shopify, BigCommerce, WooCommerce, and other platforms.
Is CBD payment processing more expensive than traditional processing?
It is a fact that High-risk accounts have slightly higher processing fees, some rolling reserve, and stricter terms. However, with QuadraPay rates can go as low as IC++1%. Please note this rate is generally offered to high-volume merchants with a minimum of 6 months of stable processing history with very low returns and chargebacks.
What’s the best approach for a startup CBD merchant?
You should focus on fully compliant website content, then get a yes from a high-risk processor and then scale volume gradually. You should think of cbd payment processing as a long-term partnership, not a quick fix.
How does QuadraPay support compliance and regulatory challenges for CBD businesses?
QuadraPay partners with CBD-friendly PSPs that employ detailed screening and compliance systems. This is done to ensure merchants meet federal and state regulations.
What payment options does QuadraPay provide for CBD merchants?
QuadraPay offers payment solutions for online and in-person CBD sales.
Can QuadraPay help reduce chargebacks and protect my CBD business?
Yes, QuadraPay can help you integrate chargeback alert services. This works as a shield for CBD merchants.
How fast can I get paid through QuadraPay?
Domestic merchants with excellent profiles can get settlements in 1 to 3 business days.
What other WooCommerce compatible payment gateways support CBD in Europe?
QuadraPay offers WooCommerce-compatible cbd processing accounts to merchants in Europe. These plugins also support recurring payments for cbd subscriptions.
Why do I need two different payment gateways for selling CBD and non-CBD products?
This is because of regulatory and compliance requirements. Keep in mind that the processors may ask you to have 2 websites as well.
Can I process CBD and non-CBD orders in the same online store?
Yes. It is possible to sell both CBD and non-CBD products in the same store. However, this totally depends on the type of products and the underwriter’s decision. You must declare all products at the time of application and should not hide any.
Future of CBD Merchant Accounts and High-Risk Payment Processing
We believe that CBD will remain high risk in the near term. Although CBD is federally legal under some conditions as per the 2018 farm law, there are still some complexities associated with it. These are with the FDA, cross-border restrictions, association with THC and cannabis, and high chargebacks. This is why CBD will continue to be a difficult industry for most mainstream processors.
However, in the coming year, the regulations will improve, especially from the FDA, EU, and WHO perspectives, and then the industry may get classified as mid-risk or even low-risk for non-ingestible products. The impact of such a transition may be huge on fees. Processing CBD payments may become cheaper. The future for CBD looks bright.
Getting Started With Your CBD Merchant Account Today
While getting approved for a CBD merchant account can be more difficult when compared to traditional industries, it can always help if merchants are well prepared. Such preparation can make a difference. With a detailed understanding of KYC requirements and the onboarding process, merchants can improve their chances of approval.
If you need any assistance in your journey of getting a CBD merchant account, then you can email us. Our email ID is [email protected]. Or you can also fill out the merchant account application form on our website. Our team will be glad to assist you.