It is projected that the global CBD market will grow by $3.52 billion over the next 5 years.
However, many of the companies in this space are recently formed start-ups. While they are operating in a booming industry, their business knowledge may be lacking in certain respects.
If you own a CBD business, you may be wondering about the advantages of setting up a merchant account.
What is a merchant account? Read on as we look at their features, and whether your business needs one.
What Is a Merchant Account?
A merchant account is a special type of bank account that is designed for businesses. It has a number of important functions.
The most significant of these is the processing of card payments. In order for your business to accept credit or debit card payments, you will need a merchant account.
A merchant account is not the same as a business bank account. You will still need a business bank account in addition to your merchant account.
A merchant account essentially acts as an intermediary between your customers' bank accounts and your business account. It withdraws funds from your customers' accounts and deposits them in yours whenever someone makes a purchase and pays by card.
If you don't have a merchant account, you may be limited to accepting payment by cash or checks. While certain online payment providers may allow you to avoid opening a merchant account, these services are expensive. They can also be difficult to fix in the event of a system malfunction.
In an age where payment by card (and even by phone) is quickly becoming the norm, such a limitation could be fatal to a business.
How Merchant Accounts Process Payments
The first function a merchant account carries out when a payment is made is to check that the customer account has sufficient funds. Once this is confirmed, the payment is allowed to proceed.
There are two types of card processing transactions; card-present transactions and card-not-present transactions.
As the name suggests, card-present transactions take place when a card is physically present when payment is being made. These are processed point-of-sale (POS) machines. This is the type of processing used by stores and restaurants.
Card-not-present transactions are used by online businesses. They are processed using what is known as a payment gateway.
Card-not-present transactions are typically more expensive for merchants than card-present transactions. Card-not-present transactions are also more susceptible to fraud.
How to Set Up a Merchant Account
To set up a CBD merchant account, submit an application today.
Many cannabis retailers have reported struggles in finding reliable payment solutions. Our service ensures streamlined transaction processing with no risk of fund transfers being unfairly delayed.
Set Up a CBD Merchant Account Today
What is a merchant account? As you can see, it's a necessity for you if you want to take your CBD business to a serious level.
If you're interested in setting up a CBD merchant account, or you have any questions about our services, contact us today.