After recently completing this research for a client, I figured I'd put this into a blog post as it may help somebody out. If you're looking to sell CBD online, you definitely know that the waters are murky, and many payment providers won't except your business. This goes specifically for PayPal and Stripe, which I always recommend to clients looking to sell standard goods online.
However, if you are looking to sell CBD products online, then you'll need to look to other payment providers, and other e-commerce platforms then you may be used to. ￼
That's because this industry is classified as a high risk endeavor for many payment platforms, something that they try to avoid. This is surprising because the industry is going to produce over $16 billion in revenue by 2025,￼ And many fortune 500 companies such as Coca-Cola are already dipping their toes into this large, growing, lake of opportunity.
Even after the 2018 farm bill went into effect, which removed hemp from the definition of marijuana under the controlled substances act, you're still hard-pressed to find a payment processor and an e-commerce platform for CBD products in 2020.
However, if you're reading this article, chances are you need a payment processor for CBD, and an E-commerce platform for CBD.
After doing our research￼, Here are the best options that we came across. Keep in mind, we've built several websites for CBD providers, and have utilized this combination of payment processor and e-commerce platform for them. So far, they have been running without any issues, and producing tons of revenue.
First, keep in mind that none of this is legal advice, and because this is a murky industry, you should definitely consult with a lawyer if you were looking to launch anything related to e-commerce and CBD. Also, note that CBD must be derived from hemp, as marijuana derived CBD is not legal at the federal level. This should also be under consideration, as no United States-based payment processing company will take your business if you are selling CBD derived from marijuana, or CBD that has over 0.3% THC content.
With that out-of-the-way, let's take a look at the payment provider and e-commerce platform that we have used for multiple CBD e-digital shops.
When making this selection, it is important to consider the fact that for your industry, you are most dependent on the payment provider and platform, the e-commerce set up comes after that. However, you need to ensure that the e-commerce platform is compatible with the payment processor. A symbiotic relationship, but one is more important than the other.
With that being said, I'm actually going to take a look at the e-commerce platform first (you’ll understand why).
We're looking for an e-commerce platform to process CBD related sales, we recommend using an open source tool that integrates with many different payment providers. This helps you diversify, which we will discuss a bit later, and due to the fact that it is open source, the only restrictions that you may meet are from the hosting platform that you use.￼
With some solutions out there, namely Wix and SquareSpace, You need to use their branded payment processing tools. Because of that, the platforms simply won't allow you to sell CBD on them, as this is a high risk for them.
That's￼ why, after our reasearch, the clear winner for a CBD E-commerce setup is WooCommerce. This is open source, and works on a word press website, which is also open source, meaning that there is no overarching company that will restrict your products listed on it. The platform also integrates with hundreds of payment processors, including the two that we will be discussing below, meaning that it is the perfect tool to sell CBD online.
We have built out a couple of custom WooCommerce stores for CBD related products, and it has worked perfectly.
Keep in mind, this is the most popular e-commerce platform for all types of sales, so you can't go wrong if you're looking to sell CBD.
We looked through dozens of payment providers, and have found two that work well with our recommended e-commerce platform of WooCommerce.￼
When it comes to processing payments for CBD related products, expect to pay high fees. This comes with the territory of high-risk payments, which you fall under.
We will discuss the specifics of the fee structures for each of the companies mentioned below, but expect to pay somewhere in the neighborhood of 5% per transaction, plus $.30, plus an annual fee, plus a set up fee. The set up an annual fees are quite pricey, and the 5% payment processing fee per transaction ￼eats into your profit margin.
The first payment processor that we recommend for CBD related sales is Square. This company has a few things going for it, and is the best choice for you. However, there is a strict application process, as it is a larger company. You'll need to provide a ton of documentation on the products that you sell, along with your business.￼
The reason this is our number one recommended company is due to the fact that it is “mainstream”. This is great — it’s not going anywhere anytime soon, and their fees are a bit less then then next option.
Pricing comes in at 4.2% for each transaction, plus $.30, and this is specific to online sales. Also, they note that if you are a larger business, they are willing to work with you on these fees.￼ Square integrates nicely with WooCommerce, via a free plugin.￼ The backend dashboard for Square payment processing is modern, very well designed, and a joy to use.￼
Now, as we mentioned before, the main drawback is the application process. The program is still in its early access phase, meaning that they won't except everybody, and the payments are still 4.2%, which is a lot, but at the lower range for CBD payment processing solutions.
If you can't get accepted by Square, take a look at the next payment processor, which we have experience with through our clients as well.
T1 payments also has an application process, but deals specifically with high risk e-commerce payments, which means that you have a better chance of acceptance with them. They are based on the ￼
They have 175+ shopping cart integrations due to this fact, and work with WooCommerce. All you need is an API key.
T1 is a smaller company, but offer great customer support, and have carved out a good following in the high-risk payment industry, which includes CBD.
These guys will charge you an account set up fee, an annual fee, and then a custom percentage based fee per transaction based on your specific business. From what we have seen in the past, this doesn't come near the 4.2% that Square offers, but, this company accepts a lot more applications.￼
With the CBD e-commerce stores that we have set up in the past, we have used T1 to make it easy for customers to pay with credit card, debit card, or e check.￼
Something that we have also discussed with our clients is the fact that you want to diversify your payment processing capabilities if possible. Because this is a high risk industry, think about what would happen if a Platform decided to drop you. You wouldn't have much recourse, and would no longer be able to accept orders out of your CBD online store, which could easily result in bankruptcy.
We recommend looking into multiple payment provider options for CBD, and incorporating multiple on your WooCommerce website.￼￼￼
If you are looking to sell CBD online, the best way to do it is through WooCommerce and using either T1 or Square to process your payments.￼ if you would like to partner with a digital agency that has experience in this industry, both on the backend and the front end, feel free to reach out. We really enjoy these types of projects, specifically when it comes to branding CBD companies and building out a beautiful e-commerce website, and are very experienced with the backend processes such as high risk payment processor integration.￼