Addressing the Payment Challenges of Cannabis Dispensaries
For dispensary owners, finding a compliant, secure, and efficient payment solution is an ongoing challenge. Federal restrictions have made traditional payment processing nearly inaccessible, leaving many businesses reliant on unreliable & illegal alternatives. These options not only introduce operational risks but also amplify the unique processing issues already facing the cannabis industry.
Let’s break down the range of cannabis payment solutions available and evaluate their unique challenges. From traditional cash-only setups to newer options like Greencard’s compliant pay-by-bank functionality, we’ll uncover which options offer the best fit for your dispensary’s long-term processing needs.
Cash-Only: Compliant with Hidden Costs
How Cash-Only and Cash-on-Delivery Work
Cash-only payment processing and cash-on-delivery (COD) require physical cash, either for in-store purchases or upon delivery. Though compliant, these options come with substantial operational and security challenges for dispensary owners.
Challenges and Costs of Cash:
High Operational Costs: Handling cash can consume 4-15% of a dispensary’s revenue, with expenses including:
Armored Transport and Security: Dispensaries often require secure transportation for daily cash pickups.
Deposit Fees: Banks typically charge high fees for cash deposits.
Secure Storage Needs: Dispensaries need to invest in safes and secure cash management systems.
Increased Security Risks: Cash on hand makes dispensaries more vulnerable to theft, both in-store and during delivery.
Missed Orders and Delivery Inefficiency: COD orders often lead to inefficiencies and missed deliveries, particularly when customers cancel last minute or lack sufficient funds, impacting driver productivity and overall profitability.
Long-Term Implications
The high costs and security risks of cash-only models make them unsustainable in the long term. As a result, dispensaries are increasingly shifting toward cashless cannabis payment solutions to streamline operations and reduce overhead.
Cashless ATMs: New Solutions with Clear Shortcomings
How Cashless ATMs Work
Cashless ATMs mimic ATM withdrawals, where customers “withdraw” an amount rounded up to the nearest $5 or $10 and receive change at the register. This workaround shows up as ATM withdrawals on bank statements, avoiding direct mentions of cannabis purchases.
Benefits of Cashless ATMs:
Customer Familiarity: Cashless ATMs offer a card-based experience that customers find convenient.
Increased Spending Power: Customers can make larger purchases than with cash-only limitations.
Compliance and Reliability Issues:
Network Violations: Cashless ATMs often violate Visa and Mastercard guidelines, leading to frequent service shutdowns.
Service Instability: Cashless ATMs operate in a legal gray area, which poses a risk for dispensaries relying on them.
Long-Term Implications
Cashless ATMs may provide a temporary fix, but their compliance risks make them an unreliable option for dispensaries long-term, especially as regulations become stricter on cannabis payment processing.
PIN Debit: Convenient but Non-Compliant
How PIN Debit Works
PIN debit allows customers to use their debit cards by entering a PIN, often misclassified as general retail to bypass cannabis restrictions. Although it offers convenience, this practice carries compliance risks for dispensaries.
Advantages of PIN Debit:
Customer Convenience: PIN debit provides a familiar option, allowing for larger purchase amounts.
Higher Average Transaction Value: Customers tend to spend more than with cash-only purchases.
Compliance Risks:
Misclassification Issues: Mislabeling cannabis payments can lead to network violations, making this option unstable.
Frequent Shutdowns: In 2023, Mastercard directed banks to stop supporting PIN debit for cannabis, highlighting the risks dispensaries face with non-compliant workarounds.
Long-Term Implications
While convenient, PIN debit lacks the compliance stability dispensaries need for reliable operations, highlighting the need for a more secure, compliant solution.
Greencard Payments: Seamless Pay-By-Bank Processing
How Pay-by-Bank with Greencard Works
Greencard Payments offers a compliant pay-by-bank solution that uses ACH rails to enable direct bank-to-bank transfers, bypassing traditional card networks and ensuring compliance. With next-day funding and support for all dispensary revenue channels—including in-store, eCommerce, delivery, vending machines, and invoicing—Greencard provides a unified, efficient platform tailored to the cannabis industry.
Advantages of Pay-by-Bank with Greencard:
Guaranteed Compliance: Greencard’s ACH-based solution meets cannabis industry regulations, reducing risks and ensuring reliable payment processing.
Solutions For All Revenue Streams: Greencard's compliant functionality allows owners to integrate pay-by-bank across their dispensary--in-store, pickup, delivery, and vending.
Next-Day Funding: Greencard’s platform provides next-day funding, supporting consistent cash flow across all revenue streams, from online and in-store sales to delivery and vending transactions.
Mobile Payments: Customers pay directly from their phones, completing cashless transactions in less than 15 seconds.
Built-In Loyalty and CRM Features:
Integrated CRM and Loyalty Program: Greencard’s platform includes CRM and loyalty functionality, automatically enrolling customers into dispensary loyalty programs without needing third-party solutions, making it easier to drive retention and loyalty.
Direct Marketing with SMS and Email: Greencard’s built-in SMS and email marketing tools allow dispensaries to schedule targeted campaigns, connecting with customers directly through the CRM to build engagement and drive repeat visits.
Long-Term Advantages
Greencard’s platform is tailored to the cannabis industry, offering dispensary owners compliant solutions across every revenue stream. With integrated compliance, CRM, loyalty, and marketing tools, Greencard helps dispensaries efficiently manage in-store sales, online orders, delivery, vending, and invoicing, while also building stronger customer relationships.
Conclusion: Setting a New Standard with Greencard Payments
The cannabis payment landscape has evolved from cash-only limitations to a demand for compliant, cost-effective, and efficient solutions. Cashless ATMs and PIN debit may offer temporary fixes but lack long-term compliance. Greencard Payments provides a robust, compliant pay-by-bank solution with next-day funding and integrated CRM and loyalty features, tailored to all dispensary revenue channels.
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