MMJ Merchant Account
What is Medical Marijuana?
Medical Marijuana, also known as MMJ, is a medicine that is a plant-based derivative of cannabis. The active compounds found inside medical marijuana include CBD, THC, and CBN are used to relieve pain and symptoms of many diseases and complications. The use of medical marijuana has been linked to providing improvements in digestive, vascular and emotional health. Even with its many medical benefits, businesses continue to have problems finding MMJ merchant account services to offer their customers.
Some of the most common conditions benefiting from the use of MMJ include:
- Multiple Sclerosis
- Muscle Spasms
- Other Ailments
Many states in the United States along with countries throughout Europe have legalized certain aspects of marijuana. In most cases, the use of marijuana is limited to medicinal purposes where varieties of the product are sold through dispensaries. Here various forms of MMJ including candies, oils or liquids are usually available for customers to purchase, usually requiring a prescription card from a state-certified healthcare professional. Even in this environment, the acceptance of medical marijuana credit card processing is normally not possible.
Types of MMJ Payment Processing available
Depending on the location of the merchant, different types of payment processing solutions can be available. In Europe, the availability of MMJ credit card processing is more commonly available than that of the USA. In the USA, an electronic check is the most commonly accepted form of payment for CBD products since Visa and MasterCard do not allow transactions on their networks.
The most common forms of MMJ merchant processing include:
- Credit Card Processing
- Bank Wire/Transfer
One of the most preferred methods of payment acceptance by dispensaries is a credit card. International merchants using the non-US payment card network of Visa and MasterCard have a much easier time receiving approvals for mmj than US-based dispensaries. In the event the merchant is based in the USA, other types of payment systems including cryptocurrency, wire transfer and even electronic check are available.
Merchants looking for an alternative to bank payment cards also have the option to accept cryptocurrency. Many consumers prefer this type of payment since it provides security and anonymity that credit cards or bank transfers do not always offer. As crypto has become a popular monetary medium, the demand by merchants to accept crypto payments has increased exponentially over the years. Offering this type of payment service is ideal for merchants looking to reach a broad base of consumers.
Using bank transfers, or wires, is another way to accept larger transaction payments without the risk of being identified by the payment card networks. Though this process will require a certain amount of coordination between the merchant and consumer, it is a method of sending guaranteed payments internationally. Making sure that the merchant's bank is able to handle incoming transfers with reasonable fees is also an important consideration when looking into this payment option.
How Medical Marijuana Credit Card Processing works
Businesses that are set up to accept credit or debit cards using a high-risk payment processor will not notice any difference from a general e-commerce merchant account. While the banks might be different than the merchant are working with, the process is nearly identical. Settlements received by the merchants might be handled differently, but that is generally the case with higher risk merchant acquirers.
For a merchant account to be set up properly, these are the required organizations:
- Merchant Acquiring Bank
- Payment Card Network
- Card Issuing Bank
The merchant acquiring bank, also known as the acquirer, handles the maintenance of the merchant's account. Their maintenance includes everything from technical support to the management of transactions on behalf of the business. The acquirer provides the merchant with the secure gateway connection to link their shopping cart and send customer transactions from their website to the payment card network.
The most recognizable of all the companies involved in a payment card transaction is the card networks. These companies, comprising of primarily Visa and MasterCard, are responsible for licensing the use of their networks to various banks and facilitating transactions between merchants and consumers. Focusing on security and limiting legal liabilities, the payment card network sets the guidelines for merchants to prevent potential problems. The network handles card authorizations by determining the card issuing bank and sending the proper card account information and authorization request for settlement.
The consumer is a customer of the card-issuing bank. This financial institution is responsible for maintaining the consumer credit or debit card account, providing security while financial management of their account. When merchant authorization requires are received from the payment card network, the card issuer reviews the customer account to check for potential fraud and the total available credit. If all parts of the transaction appear correct, the acquirer will approve the transaction or decline it if something is perceived as wrong. At the conclusion of the business day, the customer's card issuer settles the total amount requested to the merchant.
Requirements for MMJ Merchant Services
Underwriters will require merchant applicants to provide certain documents to complete their due diligence. While the documents required might vary between payment processor to payment processor, there are a few pieces that are usually always required.
- Completed Application
- Copy of Government Issued ID
- Copy of MMJ License
- Copies of Previous Processing History
- Proof of Business
Underwriters will require that the merchant send in a completed application to start the underwriting process. The payment processor or merchant acquiring that is in charge of the underwriting will perform a variety of background checks on the merchant to verify who they are potentially working with. Complete information about the merchant along with the company will help the underwriters complete the process with the highest levels of certainty.
Providing underwriters with a government-issued ID will help payment processors perform their required KYC (know your customer) background checks to ensure that the applicant is who they claim. Because the financial industry is infamous for having fraud and other activities take place, it is essential that banks and other financial organizations verify who they are working with.
Payment processors and other financial institutions are becoming more concerned as to the validity of many dispensaries and medical marijuana businesses. Providing the payment processors with a copy of a local or federal medical marijuana license for the sale of products is likely an underwriters requirement. This will help the financial organizations confirm that the merchant is operating in a legal manner while being fully registered with all necessary government departments, reducing the legal liability of the payment processor.
Many of the underwriters will also want to know how the MMJ is operating; whether seeing pictures of their facilities or paying an onsite visit. This will help the underwriters fully understand the scope of the business. Underwriters will gain a better knowledge of the merchant's operations, along with proof that the merchant does have the appropriate inventory on hand.
Start your MMJ Credit Card Processing Today
Merchants and Dispensaries looking for payment card solutions for their medical marijuana sales are encouraged to contact EU Paymentz. Our team of high risk payment processing professionals understand the mmj industry and are ready to help you get your business a reliable payment processing solution.