Adyen classifies CBD products as a restricted category on their acceptable user policy page. This simply means that CBD merchants are not automatically declined. However such applications require additional documents and the approval is not guaranteed.
It is important to understand that the restricted designation also includes an important nuance. Adyen’s agreement to serve a broad category does not imply consent for subcategories that carry separate restrictions. For CBD merchants, the distinction between hemp-derived CBD, ingestible, topicals, and pet products can each trigger a different kind of assessment under the same application. Adyen also makes it clear that their decision to onboard a merchant is not confirmation that the merchant’s products are legally compliant. That responsibility fully remains with the merchant.
Now let’s look at the reason CBD products carry this restricted status. It basically comes down to how acquiring banks and card networks view this category. Hemp-derived CBD is federally legal in the U.S. under the 2018 Farm Bill. However, state-level regulations can vary significantly, and international rules also differ. Further, the regulatory inconsistency certainly creates complexity in underwriting. These are the reasons why many banks consider this sector as risk-oriented.
On top of that, CBD merchants, especially those that are selling ingestible or wellness products, commonly carry health-adjacent marketing on their website, packaging, and social media pages. All of this adds another layer of compliance exposure during the application review.
Historically, it is a fact that CBD verticals have also generated above-average chargeback rates, particularly when the subscription billing or continuity model is involved on the merchant’s website. And this affects how all CBD merchants are underwritten, regardless of how cleanly an individual business operates.
Credit card companies require acquiring banks and payment processors to conduct an extremely enhanced due diligence on CBD applications. Many banks and payment processors find it simpler to decline the category entirely rather than build the compliance infrastructure which is needed to support it.
For any CBD business that has processing history and has got strong compliance documentation as well as enterprise level volume, exploring Adyne’s restricted pathway may certainly be worth the effort.
However, for CBD businesses, especially those at the earlier stages and those merchants that have got mixed chargeback history or those whose product ranges include ingestible with health adjacent themes, the documentation burden and the uncertain outcome can make the Adyne’s route sometimes impractical. When comparing the time investment required to pursue a restricted application then it is often better to be directed towards an acquiring partner that offers steady CBD merchant accounts and has got clearer onboarding criteria, as well as a dedicated onboarding team that understands this vertical.
We work with various acquiring partners that offer dedicated CBD and hemp driven product merchant accounts. We help CBD businesses in structuring their application in the appropriate way. We help them cover the most important documentation. We also help them in ensuring that their website is in compliance with the processor’s requirement.All this gives each application the strongest possible chance with the right acquiring partner.
If you have been declined by mainstream payment processors or are finding that restricted classification is creating barriers for your business, then you can potentially contact us to discuss the options.
Disclaimer:
The information in this answer is based on Adyen’s publicly available acceptable use policy at the time of writing and is intended for general informational purposes only. Adyen’s policies are subject to change. QuadraPay is not affiliated with Adyen. Merchants should consult Adyen directly for the most current information regarding their onboarding criteria. Nothing in this answer constitutes legal or financial advice.