Looking for a payments provider for your CBD business? Here’s what you need to know…
CBD products are serious business. Sales throughout countries where the products are legalised are growing exponentially: it’s expected that in the USA, annual sales in the industry will reach $2 billion by 2022, making it one of the fastest growing markets in existence.
What is CBD and why are people going crazy about it?
CBD (cannabidiol) is a non-psychoactive cannaboid extract that can be taken from both marijuana plants and industrial hemp. CBD’s main difference from marijuana is that it contains less than 0.3% THC, the active psychoactive chemical in marijuana; marijuana itself typically contains over 30%. As such, users of CBD products can’t get high from them, but they can still enjoy several additional benefits associated with marijuana and hemp.
CBD products are used to relieve rheumatic pains, deal with anxiety and depression, alleviate cancer-related symptoms, fight acne and improve cardiovascular health. Products containing CBD are numerous and varied, and include orally-ingested oil, body lotions, tea, coffee, bath bombs, vape liquids and even sweets!
More and more CBD start-ups are taking advantage of public demand and developing new and exciting products that are helping users’ health in myriad ways.
Payments for CBD products
Research carried out by Brightfield Group in 2017 found that over 60% of sales for CBD products are completed online. But if CBD companies want to maximise their online profits, they need to make sure they create the perfect payments ecosystem that boosts sales by minimising customer drop-off and ensures that transactions are fast, simple and secure.
There are a number of key factors that CBD companies need to look for when choosing an online payment provider:
Companies that sell CBD products fall into the ‘high-risk’ category when it comes to setting up a merchant account and building relationships with payment service providers. Payment companies may be reluctant to take them on board because of the reputational risks associated with this type of business.
Business model, practices, excessive chargebacks or legal exposure can cause a negative image of the payments company, leading to a merchant’s application being declined. Although CBD products are legal, the obvious connotations with drugs mean that many payment companies will steer clear of merchants’ business for fear of tainting their company’s image.
For CBD-associated businesses, choosing a payment provider which has experience and trust in high-risk accounts is absolutely essential.
The enhanced reputational risks associated with CBD product companies can drive transaction fees northwards. Payment companies are well aware that if they do accept high-risk CBD merchants they are one of a limited group and can therefore charge higher transaction fees.
CBD companies can rest assured, however, that there are payment providers out there that do not charge extortionate fees for their merchant accounts. They should speak with payment companies with experience in high-risk industries so that their experts can understand the business model and company ambitions. This will help to keep transaction fees as low as possible, as the payment company will better understand the nuances and risks involved in processing payments for the CBD business.
Local payment methods
With CBD trade booming in various affluent countries around the world, it’s important to build a payments ecosystem that caters for different markets. This is important for two reasons: firstly, online businesses can ensure that they offer the preferred payment method no matter who or where their customer is; secondly, they can engineer the payment methods they offer in order to expand into new markets.
When a customer reaches the checkout of an online store, they want the payment process to be as quick and easy as possible. Different countries have different preferences when it comes to payment method. For example, 40% of eCommerce transactions in Malaysia are done by bank transfer, meanwhile 57% are completed using eWallets in China, and 65% of online payments are card-based in the UK. Flexibility, convenience and understanding a country’s consumers are key to making perfect payment conditions for your CBD business.
Offering different payment methods can catapult your business’ influence in different markets to new heights. Key countries where CBD products are popular, and where business is lucrative include Austria, Belgium, Denmark, the Netherlands, Romania, Spain, and Italy. CBD businesses need to choose a payment provider which offers the necessary local payment methods preferred in these countries, to achieve the international expansion that the hype around CBD products can bring about.
Trust Payments and sister-company acquiring.com have a growing list of CBD companies who have chosen their payment gateway and acquiring solutions for their eCommerce platforms. With a wealth of expertise in providing payment services to high-risk merchants, Trust Payments/acquiring.com are perfectly positioned to help any CBD business grow their online offering, connecting with new, international markets, and ultimately boosting sales.
To find out how Trust Payments/acquiring.com’s innovative payment solutions will drive your CBD business into the future, speak with one of our team of experts today.
We will be at the Merchant Payments Ecosystem (MPE) conference in Berlin from February 19th to 21st. To set up a meeting, get in touch with us on 02036912697 or connect with us on LinkedIn.