What CBD Retailers Should Possess to Make It Easy for Opening a Merchant Account
Thursday, January 25, 2018, 6:00 AM | Leave Comment
Cannabis may be a dreaded product according to the law, but CBD or Cannabidiol, which is a derivative obtained from cannabis has many health and wellness benefits that have made it quite popular.
Although cannabis or marijuana is illegal in 25 states of the US, CBD is not so and thus enjoys good acceptance among people who want to use it for health benefits.
Hemp plants are the source of CBD that contains a little amount of THC (Tetrahydrocannabinol) which is a psychotropic substance, hence does not attract any legal prohibition. Marijuana contains significant amounts of THC that makes you feel ‘high’ is the reason why it is illegal.
Moreover, CBD can help in the treatment of diseases like epilepsy, cancer, and depression.
CBD oil is attractive business today, but retailers face difficulties in finding proper support from banks and financial companies to find appropriate payment solutions to support and expand the business that belongs to the high-risk category.
The risk of CBD business stems from CBD’s close connection to marijuana that often creates gray areas in interpreting the law and put the merchants into problems regarding the opening of merchant accounts.
However, some companies can guide you and provide the right solution by showing the way to open a CBD merchant account.
Here are the four things that merchants should have for opening a CBD account.
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Healthy Processing History
High-risk merchants should maintain proper records of processing and produce the documents for at least the last six months that tell about the transactions of business.
Banks study the records to determine how much reliable the business is and to judge how much trustworthy it can be.
The stronger is the financial worth of the company, higher will be the level of trust. Providing the records for more than six months, help to paint a better picture thereby gaining more confidence of banks offer the balances are positive and healthy.
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High volume
Since banks would be dealing with high-risk merchants, they would like to increase the stakes to justify the high investment that they would be making.
They would like to focus on high turnover and having a monthly business of $100,000 is what could help merchants to open the account.
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Strong financials
Like any other business, the evaluation of high-risk business is based on its financial strength. Banks would like to see how much the business could survive on its own economic powers.
Therefore, companies seeking to open of merchant account have to ensure that they have the books of accounts ready to demonstrate the financial abilities that appear convincing.
Strong financial muscles are necessary to tell banks that the company is doing well and hence dependable.
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Low chargeback
Companies that have good processing history would obviously have low chargeback. Banks look upon chargeback with suspicion, and it is detrimental to the company’s prospects of opening a merchant account.
Companies have to take effective measures to ensure that there are fewer chargebacks so that it becomes easy to win the confidence of banks.
