As you might have heard, 420 has become a symbol of marijuana, and there’s even an unofficial holiday on April 20th to mark this fact. What doesn’t cause pot producers to celebrate is the difficulty of getting what is known as 420 credit card processing. Most merchants and banks would rather not deal with this industry because they aren’t certain about the legalities and risks involved.
Problems With 420 Card Processing
Of course, California and Colorado have a lot of marijuana merchants. That’s why these two states tend to be at the forefront of problems with getting payment processing for this industry. People in the business struggle to obtain bank accounts and merchant accounts. Even when they find one, they may find it closed without warning. Of course, this makes it difficult to scale this kind of business when so many transactions must be conducted with cash.
The problem is that state, local, and federal laws may be in conflict. That’s why marijuana tends to largely be a cash business, even when it is legal in the state. In 2009, Eric Holder was the attorney general under President Obama. Then, Holder issued guidance to federal authorities that they should not go after the marijuana industry or associated businesses if they were clearly in compliance with their own state and local laws.
Of course, now the administration has changed, so there has been a lot of turmoil from the industry. While states may not have changed their stance on marijuana production and sales, nobody is sure what the federal government will do these days. Even if people in the industry keep doing business, banks and credit card companies are reluctant to put their own businesses on the line by doing business with pot producers.
For example, Wells Fargo did work with these companies for awhile. More recently, they have issued statements that they cannot continue to offer banking and payment services until the laws become more clear. Few big banks, or even small credit card processor, wants to take the risk of having the government tell them they are operating illegally.
The Confusion Is Generating 420 Card Processing Opportunities
Of course, where there is a way to make a profit, some businesses will step into fill the gap. There are smaller merchant processors that have been created just to offer payment processing to the marijuana industry. Once example is a company called MarijuanaPOS in California.
These processors work with smaller banks that will accept high-risk customers. Since they deal with high-risk transactions because of the conflict in laws, they also have to charge higher fees. Still, dealing solely in cash has lots of problems. For one thing, it puts businesses at a greater risk for robberies. Also, it limits sales because people would prefer to pay with credit or debit cards. Finally, the lack of funding may hurt the chance for these businesses to scale and grow.
There are 420 card processing companies. They are usually smaller ones that will accept a higher risk, and so they charge more.For more information visit site