Navigating the world of payments can be a daunting task for any business, but for those operating in high-risk industries, the challenges can be even greater. High-risk payment processing refers to the handling of financial transactions for businesses that are perceived as having a higher probability of fraud, chargebacks, and regulatory compliance issues. While risk is an inherent aspect of all businesses, certain industries are considered riskier due to factors such as high transaction volumes, turnover, and regulatory complexities.

High-risk merchants need compliant and seamless payment experiences for their customers all the same. And without payments, there is no business. Therefore, it is safe to say that businesses in high-risk industries can benefit from partnering with payment service providers (PSPs) that are tailored towards, and familiar with, their specific vertical.

The thing is, that customers don’t really care about the above. Our world today is digital. Customers are used to digital channels and expect to be able to pay when and where they want for goods and services, using their preferred payment methods.

High-risk industries

The high-risk category for payment processing includes industries like hotels, airlines, gambling, dating, adult, onlinetrading, gaming, cryptocurrency, forex and nutraceuticals.

However, one industry that has been gaining popularity but still faces significant challenges in payment processing is the CBD and cannabis industry. The main reason behind the high-risk classification of CBD merchants is the complex and varying regulations surrounding CBD products in different countries.

What is CBD?

CBD, or cannabidiol, offers numerous benefits without the psychoactive effects of THC. It interacts with the body’s endocannabinoid system to alleviate anxiety, stress, and promote relaxation. CBD’s anti-inflammatory properties can ease chronic pain and improve joint health. Studies suggest it may help with epilepsy and neurodegenerative disorders. Moreover, CBD has shown potential in reducing acne and supporting skin health. Its natural origin and minimal side effects make it a promising option for those seeking alternative remedies. Always consult a healthcare professional before use, as individual results may vary.

Main challenges for CBD payment processing

Unlike other more established industries, the CBD market is relatively new and subject to stringent regulations due to its association with its narcotic counterpart, cannabis. This lack of uniformity in laws across countries complicates payment processing for CBD businesses operating internationally. Moreover, the CBD industry’s credibility is still evolving, leading to a higher likelihood of customer refund requests, which can increase chargeback risk.

Many banks and payment providers are reluctant to work with CBD businesses as a result. In some countries, businesses are even having difficulties finding suitable banking partners or even opening a bank account. Luckily, the laws around CBD products are becoming less strict in many countries and the future looks bright.

The fact that some major card providers also pose restrictions on high-risk industries, leads some merchants to resort to cash or cryptocurrency payments. Although there is nothing wrong with this in itself, it could cause a lack of transparency, pose security risks and might complicate regulatory requirements such as Know Your Customer (KYC) and Anti Money Laundering compliance (AML).

How can you improve the online payment processing for your business?

Despite the challenges, CBD merchants can take steps to process payments more effectively. Embracing digital and online payment mechanisms is crucial to meeting customer demands, especially given the preference for digital payments after the pandemic. Partnering with experienced payment service providers who understand the complexities of high-risk industries can also be beneficial. Such providers can help CBD businesses navigate regulatory requirements, implement robust risk management strategies, optimize payment flows and find suitable payment processing solutions.

As the CBD industry continues to grow and gain legitimacy, it is likely that legislation will evolve to provide clearer payment processing regulations. However, until then, CBD merchants must be proactive in addressing the challenges they face and seek guidance from experts in high-risk payment processing.

Companies like AP7Pay are dedicated to supporting businesses in high-risk industries by providing tailored payment solutions and expert advice. With their in-depth knowledge of risk management, system design, payment flows, and regulatory compliance, AP7Pay helps CBD businesses and other high-risk merchants navigate the complexities of payment processing. By partnering with such companies, CBD merchants can position themselves for growth and success in an industry that holds vast profit potential.

If you want to grow your business, you need to make sure that you support the most preferred online payment methods in as many countries and regions as possible

Conclusion While high-risk payment processing can be challenging, it is not rocket science. By understanding the unique risks associated with their industry and seeking advice from reputable companies like AP7Pay, CBD businesses and other high-risk merchants can optimize their payment processes, ensure compliance, and unlock their true potential for growth and profitability. As the regulatory landscape evolves, these businesses must remain adaptable and proactive in their approach to payment processing to stay ahead in this dynamic and promising market.