Point of Banking – The Payment Solution for Dispensaries

Sep 20, 2018

The U.S. legal cannabis industry experienced 31% growth, climbing to $8.5 billion, in 2017, according to The State of Legal Marijuana Markets, Sixth Edition” released in June 2018 by Arcview Market Research and BDS Analytics.

The United States’ legal cannabis market is projected to reach $11 billion in consumer spending in 2018 and more than $23 billion by 2022, By 2022, that number is expected to climb to more than $23 billion. These dollars have potential to generate more than 467,000 full-time equivalent jobs in 2022, according to the research.

Researchers believe the market will grow as states continue to legalize medical marijuana and recreational use for adults, though it remains prohibited by the federal government. To date, 30 states and the District of Columbia have legalized medical marijuana. Nine of those states, including Colorado, California, and Massachusetts, as well as the District of Columbia have also legalized recreational marijuana. However, selling marijuana violates federal law and handling any proceeds from a marijuana sale is considered money laundering.

The blurred lines between federal and state laws is one of the main reasons why banks don’t want to work with cannabis dispensaries, basically, crippling their chances of getting merchant accounts. Merchants can’t accept and process credit card payments without merchant accounts. Cannabis business’ shouldn’t expect banks to become more interested under the Trump administration. In January 2018, the U.S. Justice Department rescinded the Cole memo, giving U.S. lawyers more leeway to enforce federal marijuana laws in their districts.

What this means is that cannabis dispensaries need to look for alternative options that allow them to operate their businesses and still give customers the convenience of paying for purchases with credit cards.  A Point of Banking (POB) terminal gives you a way to accept credit cards without a merchant account.

Point of Banking Explained

A Point of Banking terminal looks like an ATM, but it doesn’t dispense any cash. Users swipe their cards and punch in PINs, and then, the customer take their receipts to pay for goods. After the sale is completed, the customer gets his change in cash.

The beauty of this type of payment solution is that customers shoulder the costs of transactions not merchants.

Other Benefits of Point of Banking

Using point of banking not only saves merchants from paying percentage fees for processing card transactions, it reduces their risks of chargebacks, fraud, and refunds. When customers use point of banking terminals, they must punch in their unique PIN codes to complete transactions. In general, banks and lenders consider chip and PIN transactions riskier than other types of sales, and fewer cases of fraud are committed with four-digit code transactions.

In addition to saving merchants from having to deal with chargebacks, which is when a credit card company demands a retailer foot the bill for disputed or fraudulent transactions, any business that already has a credit card terminal can easily integrate a POB into its business. Point of banking is a service that accessible for any credit card terminal.

In Conclusion

Though many states have realized the financial benefits of marijuana and have moved toward partial or full legalization, the federal government lags behind. With the two parties are at odds, cannabis merchants should continue to expect banks to turn their backs to their businesses.

With that in mind, cannabis dispensaries can turn to point of banking as an alternative to high-risk credit card processing with a merchant account.

Businesses looking for payment solutions for high-risk ventures should turn to eMerchantBroker.com (EMB). It specializes in solutions for all types of businesses.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.