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The 4 Best Cannabis Payment Processing Companies For Dispensaries

Cannabis credit card processing is currently illegal in the US, but there are good alternative options for processing marijuana payments, including cash sales, point of banking, and ACH transfer.

    Frank Kehl
  • Last updated onUpdated

  • Chris Motola
  • REVIEWED BY

    Chris Motola

    Senior Staff Writer

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.

Cannabis payment processing can be very confusing and challenging, especially for a new dispensary owner. Although it’s still listed as a Schedule I drug by the Food & Drug Administration (FDA) — and therefore illegal under federal law — marijuana is now legal for medicinal purposes in 38 states and recreational use in 23 states. With new dispensaries opening around the country all the time, the need for a cannabis credit card processing solution has never been greater.

Unfortunately, such a solution does not exist at this time. Because the issuing banks are regulated at the federal level, all of the major credit card associations (Visa, Mastercard, Discover, American Express, etc.) have firm policies against their cards being used for marijuana sales, even in jurisdictions where it’s legal.

Despite this outright prohibition and intense demand from consumers to be able to use their credit cards at a dispensary, there is currently no legal, secure method to accept credit cards for cannabis sales. There are, however, viable alternatives to operating on a cash-only basis, which we’ll discuss below.

In addition to highlighting the payment methods available to cannabis dispensaries, we’ll also profile several reputable providers who can accept your marijuana business. Finally, we’ll briefly cover the legal issues that make cannabis businesses such a challenge when it comes to payments and give you some tips to help you find a reputable provider for your business.

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Instabill

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  • Best for international merchants
  • Offers debit & cryptocurrency payments
  • Accepts domestic & international cannabis merchants
  • Best for international merchants
  • Offers debit & cryptocurrency payments
  • Accepts domestic & international cannabis merchants

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Flowhub

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  • Best for in-person payments
  • Offers PIN debit & ACH payment methods
  • No long-term contracts
  • Best for in-person payments
  • Offers PIN debit & ACH payment methods
  • No long-term contracts

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Paybotic

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  • Best for multiple payment methods
  • PIN debit, eCheck & ACH payments supported
  • Offers POS software & card readers
  • Best for multiple payment methods
  • PIN debit, eCheck & ACH payments supported
  • Offers POS software & card readers

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Bankcard International Group

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  • Best for PIN debit payments
  • Also supports ACH, eCheck, and Bitcoin payments
  • Extensive educational resources on website
  • Best for PIN debit payments
  • Also supports ACH, eCheck, and Bitcoin payments
  • Extensive educational resources on website

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Read more below to learn why we chose these options.

Table of Contents

Why You Can’t Accept Credit Cards At Your Marijuana Dispensary

While many dispensaries are able to operate successfully on a cash-only basis, this strategy can put you at a competitive disadvantage compared to businesses that offer a variety of payment methods. Customers have become accustomed to using their credit cards for the majority of their purchases, and most of them simply expect to be able to use their cards everywhere, whether it’s at a restaurant or a cannabis dispensary.

Unfortunately, it’s currently not possible to legally use a credit card to purchase marijuana products in the United States, even in states that have fully legalized them.

Cannabis is still a Schedule I controlled substance under federal law, and the banks that issue credit cards are regulated at the federal level. What this means for you as a dispensary owner is that the credit card processing networks that are used to process credit card payments have to comply with federal law, and they cannot permit any cannabis sales to be processed over their networks.

Visa, Mastercard, Discover, and American Express have each stated publicly that they will not permit their cards to be used for cannabis sales, even if it’s legal under local state law. If you get caught trying to do it anyway, you’ll quickly have your merchant account shut down, and you’re very likely to be placed on the Terminated Merchant File (TMF) or MATCH list.

The proposed Secure And Fair Enforcement Banking Act (SAFE Banking Act) would change all of that, allowing banks and credit card processors to accept credit card payments for cannabis products in states where they have been legalized. Unfortunately, the bill is currently stalled in the Senate, with no indication that it will be passed anytime soon.

Likewise, proposals to de-list marijuana as a Schedule I drug haven’t made any progress, and such action appears unlikely in the near term. If this does eventually happen, dispensaries would be free to open traditional merchant accounts and start accepting credit card payments like any other business.

What Secure Payment Methods For Dispensaries Are There?

With credit cards off the table for now, cannabis merchants have had to get creative in finding ways to securely accept payments from customers. Here’s a summary of the most popular solutions currently in use:

Cash Payments

Pros

  • No transaction fees
  • Immediate payout
  • Offers customer anonymity

Cons

  • Extensive security requirements
  • Customers tend to spend less
  • ATM fees may be required

The old adage “Cash is king” isn’t as true as it used to be. However, many cannabis dispensaries have been able to successfully operate on a cash-only basis. Installing an ATM machine on the premises provides a convenient way for your customers to withdraw the funds they need to pay in cash, as most people no longer carry large sums of currency with them at all times. Cash-only transactions eliminate processing fees, account fees, and the risk that your account will suddenly be shut down. You also won’t have to wait several days for funds to reach your account, which can be very handy if a steady cash flow is critical to the success of your business.

At the same time, handling large sums of cash creates its own set of headaches. Having all that money lying around will make you a prime target for thieves, so you’ll have to invest heavily in security measures such as safes and lockboxes to protect your money. You might also need to hire armored cars to transport your funds to the bank. The biggest disadvantage of running a cash-only dispensary, however, is that you’ll earn less money in sales than you would if you offered additional payment methods. Study after study has shown that your number of sales and average ticket size will both go up significantly if you offer your customers an alternative way to pay you than just the spare change in their wallets.

ACH Transfers

Pros

  • Very secure
  • Low transaction processing costs
  • No processing hardware required

Cons

  • Customer must install third-party app for in-person use
  • Extensive underwriting process required

ACH transfers have become more popular in recent years, with many businesses as a lower-cost alternative to expensive credit card processing fees. Funds are transferred directly to you from your customer’s bank accounts, offering a cashless and contactless payment solution. Transaction fees are typically much less than those for credit cards. ACH payments are particularly well-suited to eCommerce businesses, giving customers a convenient alternative to entering their debit card information.

Unfortunately, this convenience doesn’t translate quite as well in a retail setting. Because there’s no physical payment card involved in making an ACH transfer, your customers will have to download and install a third-party mobile app (Aeropay is currently a popular choice) on their phones and enter their banking information before they’ll be able to make a purchase. While inconvenient for a one-time purchase, it works quite well for repeat customers. Another consideration is that approval for ACH processing requires a lengthy underwriting process before you can start. This process is separate from the one required to be approved for a merchant account using credit and debit cards.

PIN Debit Payments

Pros

  • Secure, low-risk payment method
  • Low transaction processing costs
  • Convenient for in-store use

Cons

  • Requires full regulatory compliance on the part of the provider
  • Not available for online payments

PIN debit payments have emerged as one of the safest, most convenient payment methods legally available to cannabis merchants. With this method, your customers can use their regular debit cards in your store, authenticating their identity with a PIN. However, setting up a PIN debit payment system that’s fully legally compliant requires a lot of additional work on the part of your provider. For this reason, relatively few providers currently offer PIN debit processing for cannabis businesses. Transaction fees will also be higher than those for low-risk transactions, reflecting both the higher risk involved with cannabis products and the additional costs of setting up a compliant payment network.

While PIN debit is a very convenient payment method for in-person use, you won’t be able to use it for eCommerce sales. Customers cannot enter their PINs online, and running the card as a credit card is not allowed at the present time. We recommend setting up a BOPIS (Buy Online, Pay In-Store) payment system if you plan to accept online orders at your dispensary.

Cryptocurrency Payments

Pros

  • Offers customer anonymity
  • Bypasses legal requirements of other payment methods

Cons

  • Financially very risky due to the volatility of the cryptocurrency market
  • Not suitable for high-volume use

With all the thorny legal issues plaguing other, more traditional, payment methods, it’s no surprise that many dispensaries would turn to cryptocurrency payments as a way to get around these hurdles. On the surface, accepting Bitcoin and other digital currencies seems like an easy way to avoid high transaction fees and legal restrictions.

Unfortunately, cryptocurrency also comes with some very significant disadvantages. Relatively few providers offer support for this payment method, but the biggest impediment is that the wild volatility in the crypto market can put your business at serious financial risk. While offering crypto as an alternate payment method for occasional use is probably safe, we don’t recommend relying on it as your only non-cash payment method.

Point Of Banking

Pros

  • None at this time

Cons

  • Currently not supported by banks or credit card associations

Point of Banking payments allowed customers to withdraw money from their bank accounts to pay for their purchases. Also sometimes called a “cashless ATM,” a point of banking solution allowed your customers to use their debit cards to access their bank accounts. Like a traditional ATM, disbursements usually had to be in $5.00 increments. However, a point-of-banking machine didn’t disburse actual cash. Instead, funds were transferred directly to the merchant’s bank account, with any excess being refunded to the customer in cash.

On the downside, point-of-banking machines were very expensive. Most were only available through leasing contracts and could cost as much as several hundred dollars per month. You’d also have to pay transaction fees to your processor, although they were typically lower than those for credit card transactions.

Despite their high cost, point-of-banking solutions were one of the most convenient and efficient ways to offer customers an alternative to cash payments. However, the machines could easily be reprogrammed to disguise both the nature of the product being sold and even the merchant’s identity. For these reasons, Visa, Mastercard, and the major card-issuing banks all withdrew support for point-of-banking machines in December 2022. Unless these restrictions are lifted in the future, cashless ATMs are no longer a viable payment method for your dispensary.

4 Best Secure Cannabis Payment Processors For Dispensaries

A cannabis payment processing account is simply a merchant account that allows you to accept noncash payments for cannabis products. Due to the dramatically higher risk associated with these goods, cannabis accounts will almost always come with higher rates and fees and more restrictive policies than low-risk accounts.

Here are the best companies we’ve found that can provide payment processing services for your cannabis dispensary:

1. Instabill: Best For International Merchants

Instabill


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Pros

  • Offers debit payment processing option
  • Offers cryptocurrency option
  • Reputable company with a proven track record

Cons

  • Does not accept startups
  • No offshore merchant accounts for US-based businesses
  • Typically requires a six-month rolling reserve

Why We Chose Instabill For Cannabis Payment Processing

Instabill is a veteran high-risk provider that offers some payment processing services to medical marijuana dispensaries. The company is very transparent about accepting cannabis merchants, and its website includes specific information about which payment methods are available and which particular business types are supported.

Instabill clearly discloses who it works with, what payment methods are available, and what limitations you’ll have to accept. We’re particularly impressed with the disclosures regarding the need for a reserve account — something most providers won’t tell you about.

Getting approved for a cannabis merchant processing account with Instabill will require four to six months of previous processing history, which could be a real challenge in this industry. Account approval requires anywhere from 10 business days to two weeks.

Instabill Pricing

  • Variable monthly account fees (depends on backend processor)
  • Variable transaction processing fees (depends on backend processor)
  • Variable contract terms (depends on backend processor)
  • Rolling reserve account required (terms negotiable)

Instabill Features

Instabill currently offers the following primary features:

  • Debit Payments: This solution enables customers to have a debit card connected to their bank accounts for easy loading and reloading.
  • Cryptocurrency Payments: Customers pay with Bitcoin or some other digital currency.
  • Offshore Merchant Accounts: In countries where cannabis is legal, Instabill offers merchant accounts that include support for credit card payments. These are currently not available to US-based merchants.
  • Payment Gateway: Instabill integrates with numerous third-party gateways, depending on your backend processor.

All of these methods come with risks and limitations, but they will elevate your business above operating on a cash-only basis.

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2. Flowhub: Best For In-Person Payments

Flowhub


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Pros

  • Offers PIN debit payments
  • Offers ACH payments through Aeropay
  • Offers fully integrated POS system
  • No long-term contracts

Cons

  • Not well-suited to delivery-only dispensaries
  • Expensive monthly fees for add-on services

Why We Chose Flowhub For Cannabis Payment Processing

As a dedicated cannabis payment processor, Flowhub offers a variety of products and services custom-tailored to the needs of dispensaries. While Flowhub isn’t cheap, you can save a lot of money (and handle multiple locations) by bundling services under a custom pricing plan. The company also offers great customer support, with an extensive knowledgebase on its website and email and telephone support. Integrations with a wide variety of third-party services designed exclusively for the cannabis industry make it a great all-in-one choice for your dispensary.

Flowhub offers both PIN debit and ACH payment options to cannabis merchants, although your customers will have to download and install the Aeropay app on their mobile devices to use the latter option.

Flowhub Pricing

  • No monthly fees
  • Variable transaction processing fees
  • No long-term contracts (60-day notice required to close account)
  • Hardware and account setup fees not disclosed

Flowhub Features

Flowhub offers the following products and services to handle every aspect of running your dispensary:

  • Includes PIN debit payment solution
  • Offers ACH payments through Aeropay
  • Flowhub Maui point-of-sale (POS) software for Mac and iPhones/iPads
  • Greet mobile app for customer check-in and identity verification
  • Stash app for inventory management
  • View mobile data analytics app (available for iOS and Android)
  • Numerous other third-party integrations

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3. Paybotic: Best For Multiple Payment Methods

Paybotic


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Pros

  • Offers PIN debit, eCheck and ACH payments
  • Processing hardware available
  • Wide range of ancillary services for dispensaries

Cons

  • No publicly disclosed pricing

Why We Chose Paybotic For Cannabis Payment Processing

Florida-based Paybotic specializes in serving the CBD and cannabis industries. It’s been in business for over 10 years — a long time in these industries — and has the experience to help you run a legally-compliant dispensary. Paybotic is one of the most experienced cannabis processors in the industry, and offers a full range of services for retail, eCommerce, delivery, and curbside pickup business models.

While the company doesn’t offer any specific pricing information, you pay only a single monthly fee for your account. Transaction processing costs are passed onto your customers in the form of a convenience fee, which helps to keep your costs low and predictable. Online feedback from merchants is mostly positive, which is more than we can say about most of the major traditional credit card processors.

Paybotic Pricing

  • Variable monthly fees
  • Variable transaction processing fees
  • No reserve required for ACH or eCheck processing

Paybotic Features

Paybotic offers a wide variety of services for cannabis dispensaries. Note that the company also accepts CBD merchants, so some services (such as credit card processing) that are available to those businesses will not be offered to cannabis merchants. Here are the major features:

  • PIN debit payments
  • eCheck processing
  • ACH processing
  • POS software
  • Terminals for debit card use
  • Smart Safe Depository Banking for handling cash
  • Loyalty & gift card programs
  • Business insurance & business funding services available

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4. Bankcard International Group: Best For PIN Debit Payments

Bankcard International Group


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Pros

  • Offers PIN debit payments
  • Support for ACH & eCheck payments
  • Provides outstanding educational resources

Cons

  • No publicly disclosed pricing
  • No feedback from merchants available

Why We Chose Bankcard International Group For Cannabis Payment Processing

Not to be confused with North American Bancard, Bankcard International Group (BIG) is a fairly new high-risk payment processor that offers specialized support for cannabis businesses. Founded by a group of payments industry veterans, BIG offers merchant accounts for CBD, cannabis, and other high-risk industries.

Bankcard International Group provides the most extensive educational resources on the intricacies of legitimate cannabis payments processing that we’ve found to date. It’s also one of the few cannabis providers we’ve found that’s accredited by the BBB, and has had zero complaints since accreditation. The company’s most appealing feature is that it offers a fully transparent, legally-compliant PIN debit processing solution — something that can help you avoid operating on a cash-only basis and significantly increase your overall sales volume.

Bankcard International Group Pricing

  • Variable monthly fees
  • Variable payment processing costs
  • Variable equipment costs (PIN pads, terminals, POS systems)

Bankcard International Group Features

BIG currently offers the following features for cannabis merchants:

  • PIN debit payments
  • ACH & eCheck payments
  • Bitcoin payments (no other cryptocurrencies supported)
  • Proprietary BIG Payment Gateway
  • Virtual terminal
  • Extensive third-party shopping cart integration
  • Tokenization & encryption

The company’s website discusses many other ancillary services as well, so you’ll want to contact it directly for further information.

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Why We Don’t Recommend These Cannabis Payment Processors

While many merchant services providers support high-risk industries, not all of them are willing to take on a cannabis dispensary as a customer. The vendors below — while good companies in their own right — either don’t accept cannabis merchants or don’t have a sufficient track record to warrant a recommendation at this time.

Square

The question inevitably comes up: Why not just use Square? The company is extremely popular with small business owners, offering predictable flat-rate pricing and month-to-month billing. Unfortunately, it doesn’t currently accept cannabis merchants. Although the company now has a trial program for CBD businesses, the additional risks and legal complexities associated with marijuana sales make it a no-go at this time. Using Square to process cannabis sales explicitly violates the company’s Terms of Service, and you will get shut down when (not if) the company figures out what you’re really selling.

PaymentCloud

PaymentCloud is one of our favorite high-risk merchant account providers and a great choice for CBD businesses. However, the company does not accept cannabis merchants at this time, primarily due to the fact that it’s currently illegal to accept credit cards as payment for cannabis products. Should cannabis be delisted as a Schedule I drug in the future, we anticipate that the company will open its services to dispensaries.

Naturepay

Alaska-based Naturepay is a small provider that specializes in serving the cannabis industry. The company claims to allow credit card processing for cannabis businesses, despite the legal prohibitions discussed in this article. While it’s not clear exactly how Naturepay is able to accomplish this, it most likely involves deliberately miscoding cannabis transactions — an unsustainable tactic that will get you shut down when you eventually get caught. If that risk doesn’t deter you, the flat 5.95% + $0.30 per transaction fee for all credit card transactions might. On the plus side, Naturepay offers month-to-month billing and supports alternative payment methods such as ACH transfers and PIN debit payments. The company’s experience in working with the cannabis industry makes it a good choice for dispensaries, as long as you pass on the credit card processing option.

Hypur

Another small provider that specializes in serving the cannabis industry, Hypur offers an app-based ACH payments service that works for retail and eCommerce businesses. The company has an excellent website, with numerous educational resources and clear explanations of the issues confronting the marijuana industry. Unfortunately, we’ve found a disproportionate amount of negative feedback from both merchants and customers alleging technical difficulties with the company’s app. Until Hypur is able to fix the bugs in its payments solution and offer a reliable way to pay for cannabis purchases, we can’t recommend it for your business. Hypur was recently acquired by POSaBit Systems Corp.

Why Dispensary Payment Processing Is Considered High-Risk

It should come as no surprise that cannabis dispensaries are firmly in the high-risk category when it comes to payment processing. Being labeled as high-risk means that it’s much more difficult to get approved for an account, as relatively few providers are willing to accept these types of businesses. Processing rates, account fees, and contract terms will be more expensive and restrictive than those for a comparable low-risk business. However, you can still get reasonable terms and pricing if you go with a reputable high-risk specialist that works with the cannabis industry.

The following factors combine to make cannabis dispensaries extremely risky for payment processors to do business with:

Illegal Status Under Federal Law

As discussed above, any cannabis-derived product containing more than 0.3% THC is still classified as a Schedule I drug under federal law. While the alternative payment methods we’ve outlined above will give you secure noncash options for your customers, you won’t be able to accept credit cards until the day finally arrives when Congress acts to reclassify cannabis products and take them off the Schedule I list. The bad news is that, while delisting cannabis will make it possible for dispensaries to accept credit cards like any other business, the cannabis industry is likely to remain in the high-risk category due to the other factors described below.

Cannabis deliveries and eCommerce sales are also hamstrung by the fact that it’s illegal to ship cannabis products through the US Postal Service — even within a state that has legalized these products. Major private shippers like FedEx and UPS have also refused to ship cannabis products, leaving dispensaries to rely on small, private shipping firms that are willing to work with them.

Varying Legal Status Under State Law

At the moment, many states have acted on their own to legalize cannabis for medicinal purposes, recreational use, or both. This has created a bewildering menagerie of often-conflicting state laws that cannabis merchants must comply with. While compliance is relatively straightforward for a local dispensary that only sells its products in person, it can be extremely challenging for an eCommerce business trying to sell in multiple jurisdictions where cannabis is legal.

High Chargeback Rates

Chargebacks are a known risk for just about any type of business, but the chance of experiencing one is much higher with cannabis products. While there are many reasons why a customer might decide to file a chargeback, the perceived lack of medical effectiveness of cannabis products is one of the most probable. For example, a customer might purchase medical marijuana from a dispensary to treat anxiety. If they feel that the product doesn’t work for them but can no longer return it, they might resort to filing a chargeback to get their money back. While chargebacks are most commonly associated with credit card payments, the other payment methods we’ve described above also have mechanisms for customers to dispute a purchase after the sale.

The cannabis industry is unique in that its primary product is both legal and illegal simultaneously, thanks to conflicts between the laws of the United States government and those of many US states. This situation creates a number of difficulties for dispensaries struggling to operate a legitimate business in cannabis-friendly states. Here’s a brief rundown of the major issues to be aware of:

Cannabis Products Are Illegal Under Federal Law

The first and most important thing to know about the current state of marijuana law in the United States is that cannabis products (defined as having 0.3% or more of tetrahydrocannabinol, or THC) are still listed as Schedule I drugs by the FDA. Under federal law, it’s illegal to possess, use, or distribute these products — period. Also, the Supremacy Clause of the US Constitution (Article VI, Paragraph 2) explicitly states that federal law will take precedence over conflicting state law. While that should settle the argument, the fact is that the federal government has generally declined to enforce the law in states that have chosen to legalize marijuana or to challenge conflicting state laws in the courts. At the same time, efforts to delist cannabis as a Schedule I drug have made little progress to date.

Credit Card Processors Must Comply With Federal Law

While you can still register a marijuana dispensary and obtain a business license to operate in a state that has legalized cannabis products, your bank and credit card processor have to comply with federal law. Credit card associations must operate under the same constraints, which is why Visa and Mastercard have policies stating that they won’t allow their cards to be used for cannabis purchases. As we’ve discussed above, this restriction prevents dispensaries from legally accepting credit card payments for cannabis products. (Note that ancillary products, such as water pipes, etc., don’t have this restriction.)

Offshore Accounts & Money Laundering Laws

One possible workaround that you may be considering is to obtain an offshore merchant account that will allow you to accept credit card transactions without routing the transactions through a US bank for processing. Our advice here is simple: Don’t do it! Even with a merchant account in a country that has legalized cannabis, the act of transferring funds from the sale of cannabis products in the US to a foreign account and then back into your local business bank account violates federal money laundering statutes. You would be subject to criminal liability, meaning that if prosecuted and convicted, you could face the possibility of prison time in addition to having your business shut down.

Cannabis Products Cannot Be Shipped Through The US Postal Service

Another serious legal issue — particularly for eCommerce dispensaries — is that it’s still a felony under federal law to ship Schedule I drugs (including marijuana) through the US Postal Service. This is true even if you’re just shipping within the borders of a state where marijuana use is legal. Likewise, most major private carriers (such as FedEx and UPS) won’t risk violating the law by shipping your cannabis products. If you want to accept online orders from states that have legalized cannabis products, you’ll have to hire a private courier service that specializes in working with the cannabis industry. Otherwise, you’ll effectively be limited to accepting online orders for in-person pick-up at your dispensary.

What You Should Look For In Marijuana Payment Processing

With a few notable exceptions, finding a good marijuana payment processing provider for your cannabis business involves the same criteria as finding a good low-risk provider. It’s just much harder to find a provider that offers the right combination of reasonable prices, fair contract terms, and high-quality customer service. Here are the most important considerations:

Does The Processor Accept Cannabis Dispensaries?

You’ll need to confine your search to providers that are actually willing to provide payment processing services for cannabis merchants. Unfortunately, the majority of providers — including many high-risk specialists — don’t accept cannabis businesses at all due to the legal issues we’ve discussed above. Some well-known high-risk providers accept CBD merchants, but not actual cannabis businesses. At the moment, most of the providers that will accept a cannabis dispensary are small firms that have only been in business for a few years and specialize in serving the cannabis industry.

Can You Get Account Approval?

The underwriting process required to get approved for a merchant account can be tedious for any merchant, but it’s particularly difficult if you sell cannabis products. Nonetheless, completing underwriting before you start processing credit card sales can save you from having your account suddenly shut down once you’ve started using it. You should be skeptical of providers offering “instant” approval of your merchant account, as they often defer this critical step until after you’ve already signed a long-term contract.

What Is The Pricing System?

As with any high-risk industry, transaction processing costs are going to be significantly higher than they typically would be for a comparable low-risk business. Providers offering credit card processing for cannabis merchants typically use a flat-rate pricing plan, with the average rate for retail sales being around 5.95% + $0.30 per transaction (or more than twice the going rate for low-risk businesses). As discussed above, however, we recommend that you avoid credit card processing for actual cannabis products due to the high risk of having your account terminated. The good news is that ACH and PIN debit solutions typically involve significantly lower processing rates, as you won’t have to pay interchange fees to the card-issuing banks. In comparing different providers, be sure to also factor in the impact of recurring and incidental fees on your overall costs.

Will You Have To Deal With Reserve Accounts?

Another additional “expense” that most high-risk merchants have to contend with is a rolling reserve. That’s where your processor withholds a certain percentage of your funds every month until the reserve is met. While you’ll eventually receive all your money, rolling reserves can create serious cash flow problems for a small or newly established business.

Can You Accept A Long-Term Contract?

We prefer month-to-month billing arrangements that don’t lock you into a long-term contract or force you to pay an early termination fee (ETF) if you close your account early. However, cannabis merchants will often have to accept both a long-term contract (typically for three years) and an ETF. Be aware that almost all long-term contracts include an automatic renewal clause that extends your contract, typically for one-year periods at a time.

What Kind Of Processing Hardware Do You Need?

Since you’ll be selling cannabis products out of a retail location, you’ll need some type of processing hardware to process and track transactions. Unfortunately, your needs will be very different from other businesses, which can get away with a simple countertop terminal or a mobile POS system. You’ll need a system that can handle cash and PIN debit transactions, as well as provide the analytical data you need to run your business efficiently. We recommend that you invest in a specialized cannabis POS system that will keep you compliant with the laws of your jurisdiction. These systems aren’t cheap, but they’re currently the best option for cannabis dispensaries.

What Kind Of Customer Support Can You Expect?

In researching dozens of merchant account providers, we’ve found that high-quality customer service is the real secret ingredient that separates the merely average providers from the truly outstanding ones. Customer support issues occur more frequently with cannabis and other high-risk merchants, so you’ll want to pay particular attention to a provider’s reputation in this area.

Which Cannabis Payment Processor Is Right For My Dispensary?

Although we’ve given you four recommendations to start you on your search for cannabis payment processing solutions for your dispensary, there isn’t any single company that’s the “best” — or even the most affordable. You’ll want to find a provider that offers the best fit with how you want to run your business. Moves to legalize marijuana use for medicinal and recreational use in many states have created a tremendous business opportunity for cannabis entrepreneurs, but they’ve also created a hopelessly fragmented and complex legal landscape where compliance with the law is both challenging and essential to the survival of your business.

With that in mind, be aware that nothing in this article should be construed as legal advice. We strongly encourage you to seek out the services of a business attorney in your local area who can assist you in staying within the bounds of the law as it currently exists. We also recommend that you steer clear of any payment processor that promises to allow you to accept credit cards for cannabis products for the reasons discussed above.

If you’re just getting started in the marijuana industry, you’ll have a lot of concerns beyond finding a good cannabis payments processor. Getting the funds to launch your business can also be a daunting challenge. Check out the following articles for some helpful tips and suggestions:

FAQs: Cannabis Payment Processing

Do I need a merchant account for my cannabis dispensary?

Yes. Depending on the payment methods supported, you will need a merchant account to ensure that funds from your transactions are deposited into your business bank account. For US-based merchants, this account will differ from a traditional merchant account in that it will not include support for accepting credit card payments.

Can I accept credit card payments in my cannabis dispensary?

No. Cannabis is still listed as a Schedule I drug by the FDA, making it illegal to purchase it using a credit card, even in states that have legalized it for medicinal and/or recreational use. The major credit card associations have also prohibited credit card sales of cannabis products in the United States. Note that these restrictions do not apply in international jurisdictions that have fully legalized cannabis products.

What payment methods can I legally accept in my cannabis dispensary?

As of this writing, the following payment methods are available to cannabis merchants in the US: (1) cash, (2) PIN debit, (3) ACH transfer, and (4) cryptocurrency payments. Note that point-of-banking solutions (i.e., “cashless ATMs”) have been shut down and are no longer available.

What is an ACH payment for cannabis?

ACH payments use the Automated Clearing House (ACH) network to transfer funds directly from the customer’s bank account to the merchant’s account. ACH payments are easiest to set up for online payments. In-person ACH payments will require a smartphone app that your customer must download and set up in advance of making a purchase.

What is a cashless ATM?

Cashless ATMs (or point-of-banking solutions) allow customers to withdraw money from their bank accounts and transfer it directly to a merchant’s account instead of being dispensed as cash. Due to concerns about potential fraud, the credit card associations and major card-issuing banks shut down the use of cashless ATMs in December 2022, and they can no longer be used for cannabis sales.

In Summary: 4 Best Secure Cannabis Payment Processors For Dispensaries

  1. Instabill:
    • Best for international merchants
    • Offers debit & cryptocurrency payments
    • Accepts domestic & international cannabis merchants
  2. Flowhub:
    • Best for in-person payments
    • Offers PIN debit & ACH payment methods
    • No long-term contracts
  3. Paybotic:
    • Best for multiple payment methods
    • PIN debit, eCheck & ACH payments supported
    • Offers POS software & card readers
  4. Bankcard International Group:
    • Best for PIN debit payments
    • Also supports ACH, eCheck, and Bitcoin payments
    • Extensive educational resources on website
Frank Kehl

Frank Kehl

Senior Staff Writer at Merchant Maverick
Frank has been writing about payment processing and business services since 2015. He is a retired Air Force officer and a former practicing attorney. He has a Bachelor of Science degree in Psychology from The Pennsylvania State University and a Juris Doctorate degree from the Ventura College of Law, and currently resides in Paso Robles, California.
Frank Kehl
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