Not really. PayPal is a US company, which is why the sale of products containing CBD (oils, flowers, etc.) is generally prohibited. However, since PayPal is networked worldwide, the same strict restrictions apply to all payment transactions via PayPal all over the world. It is therefore not (actually) legal for any online store to offer CBD products and pay for them via PayPal.
Traditional payment processors can have a significant impact on CBD merchants. Providers such as PayPal, Stripe and Square are big names in the industry, but they only offer their services to a limited extent. Many merchants have the problem that they cannot sell their CBD flowers and other products with PayPal and Co. We explain why this is the case and what alternatives there are here.
Selling CBD flowers or oils with PayPal
Often CBD merchants don’t realize this, but when they use a traditional payment processor like PayPal, they are putting their entire business at risk.
Traditional processors generally prohibit the sale of CBD. A violation of this policy can result in a merchant’s account being frozen. Merchants will then no longer have access to their business and the funds in their merchant account. This is an urgent problem for a merchant.
Protect your CBD merchant account and familiarize yourself with the policies of traditional payment processors.
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Many merchants sell their products via PayPal for several years without any consequences and then overnight the account is blocked.
This is particularly annoying if the merchant account is also used for other stores, as these can then no longer use PayPal either. Therefore, you really have to be careful and should open a new PayPal account if necessary
Why is it not allowed to sell CBD flowers with PayPal?
The sale of CBD classifies a trader as “high risk”. This is due to the advanced regulation and specialization required for high-risk industries. CBD traders work in an industry where regulations are constantly changing. Since the sale of CBD has been legalized, many factors continue to evolve. For this reason, selling these products carries a higher risk than the average product on the market.
PayPal’s CBD policy
PayPal’s CBD policy is pretty simple. As one of the first payment processors to transform eCommerce, PayPal avoids high risk accounts.
PayPal makes it very easy for merchants to sign up and start accepting payments immediately. However, PayPal is only aimed at low-risk industries, as these have low chargeback volumes.
If PayPal detects an above-average chargeback rate, the merchant account and all payment processing functions will be suspended until a further review is completed.
This process can take weeks due to the size of the PayPal platform. Since PayPal does not allow high-risk industries to use its platform, CBD merchants are simply out of luck.
So PayPal doesn’t want to worry about the sale of CBD products being banned in order to comply with regulations. The same applies to other high-risk industries.
Exceptions
Nevertheless, you can always find stores that sell their CBD flowers via PayPal and this also seems to be possible on larger platforms such as eBay. Why?
Either these stores don’t know any better and use this payment provider rather naively. Then it is only a matter of time before they are “caught” and, in the worst case, banned for life.
The other possibility is that they actually managed to get a special permit for a CBD merchant account.
PayPal special authorization – CBD merchant account
According to PayPal, it is possible to apply for special authorization from your own “specialist colleagues”.
However, experience reports show that smaller merchants hardly stand a chance. No matter how often you try to get in touch with the payment provider, nobody responds. In forums, you can find countless dissatisfied CBD traders expressing their displeasure because they believe that double standards are being applied here. It is probably easier for larger stores to obtain such a permit than small private traders.
We cannot verify 100% whether this is true, but we keep hearing about it.
This means that this option exists in theory, but still fails in practice. If you still want to try, you can find more information here.
ITS Just Some
F!%#ING HEMP!
Tired of dealing with PayPal? Make an appointment and we will inform you about the extensive options and find the right payment provider for you.
Stripe – A PayPal alternative for CBD flowers?
In short, no. Stripe’s CBD policies contain similar restrictions to those of other traditional payment processors. Stripe’s popularity in traditional payment processing often confuses high-risk merchants.
Stripe’s guidelines state that high-risk industries are not allowed to use any aspect of the platform. These explicitly named industries include all cannabidiol products. This means that if a merchant is “caught” selling CBD, their account can be frozen. It is now up to the merchant to set up a high-risk merchant account to recover their business and funds. Once this is done, Stripe can release the funds and deactivate your account.
CBD on the radar
Stripe uses machine learning through “Radar” that can assess the risk of each payment in real time. Radar is a helpful tool for merchants and can even protect them from fraud. On the other hand, this means that merchants using Stripe are constantly monitored for risks. High purchase volumes or an increase in chargebacks can make merchants appear high risk to Stripe.
Radar may automatically flag your merchant account for review by Stripe. This may result in your account being temporarily frozen.
Stripe has no experience with high risks and does not want to.
Square’s CBD guidelines
Recently, Square’s CBD policy has changed. A CBD program for high-risk merchants has been introduced.
When the sale of CBD was legalized in 2018, Square felt that its platform needed to be opened up to this new market. Therefore, Square processing was made available for all types of CBD transactions. There is a CBD processing solution for in-person, online, in-app and virtual terminal sales. Square CBD Processing provides a clear price breakdown for each solution on its website. More information about Square’s CBD program can be found here.
Square is one of the first traditional platforms to deal with CBD settlement. However, merchants must undergo an intensive vetting process in order to be listed. Square ensures that all products sold on its platform are below the THC threshold. Furthermore, the Square program is just a trial for the payment processing company.
Bad luck for CBD flower traders
High-risk merchants looking for solutions through Square’s traditional payment processing platform are out of luck. The platform does not support high-risk industries due to the specifications and expertise required. Without knowledge of this term, high-risk merchants may be caught in a breach of terms. This will result in the trader’s account and funds being frozen until a high risk account is established elsewhere. A full list of terms, prohibited goods and restricted sales can be found on Square’s website.
Conclusion – Selling CBD flowers with PayPal and co.
High-risk merchants who set up payment processing through traditional platforms are sure to run into problems. PayPal, Stripe or Square simply can’t meet the needs of a high-risk merchant. Therefore, it’s important to understand payment processing in your industry.
As a high risk trader, there are still many reliable options to choose from.
PayPal alternatives for CBD flowers
Lars Funke is our competent contact for all questions relating to payment providers for online stores and has the necessary expertise to get your CBD merchant account on the right track with a high-risk solution.
With the legal opinions of our lawyer Marek Schauer, they form the perfect basis for locating the optimal payment provider.
Simply contact us for a no-obligation consultation.
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