January 7, 2021 | Merchants | Dustin
You set up your ecommerce store, listed your products, and are ready to start selling. Your last step is finding a Shopify merchant account. The platform has their own service called Shopify Payments, which allows you to apply for a merchant account through them, but it comes with certain limitations. We’ll discuss more about that service later, but for now, let’s dive in and discover the best payment processing options available outside of Shopify Payments.
High Risk Merchant Account Shopify
High risk merchant accounts are a unique category of online payment processing. They are custom suited for businesses that have higher risks associated with them. These risks include high chargeback rates, brand conflicts, and regulatory concerns.
Thankfully, there are solutions in the market for companies operating websites in unconventional categories. If you’re curious if you require a high risk solution, take a look at the most common high risk verticals to see if you qualify.
Shopify Payment Gateway
Before delving into different payment processing solutions, it’s important to distinguish between a Shopify merchant account and a Shopify payment gateway.
The former is a business bank account that retains funds. On the other hand, a payment gateway is a backend tool on your website that executes a payment transaction.
The two work together and the terms are often used interchangeably. But keep in mind, a gateway requires an integration that connects to the website. Having an easy integration is key to save you time. It ensures your merchant account and gateway work smoothly together.
You can view a list of some the USA gateways Shopify works with here. But keep in mind this is only a few of the companies that offer gateway solutions that integrate with Shopify.
Shopify’s List of Payment Gateway Providers
As a platform that hosts new businesses and helps merchants sell their online goods, Shopify strives to provide all the resources you’ll need to run your shop. In the case of a CBD payment gateway or gateways for other high risk industries, Shopify won’t supply a merchant account directly so they have a list of third-party companies as possible options.
Important Note: Shopify’s Payment Gateway list is NOT exhaustive.
Shopify explicitly states, “Merchants are not limited to the recommended list of payment providers”. Moreover, the list describes companies that Shopify has partnered with in some aspect. In which case, Shopify is likely taking a percentage of processing costs from any customer that uses one of those services. So using a provider outside the list can save you critical costs on payment processing.
As long as the third-party provider you choose has an integration and accepts your business, then you’re good to go. Companies like PayKings, for example, have easy-to-implement Shopify gateway integrations and can beat the rates of the providers you see on this list.
CBD Merchant Account Shopify
Shopify recognizes the changing laws and regulations in the CBD industry. In turn, they allow certain types of CBD-related businesses to sell merchandise and assorted products through their platform. But they do have limitations on the types of CBD or hemp-related items you sell using the Shopify Payments service.
To put it plainly, they don’t allow you to open a CBD merchant account through Shopify. They recommend contacting third-party providers and using alternative merchant account companies to set up your credit card processing services.
What about hemp-derived products?
As mentioned before, Shopify is risk-averse. They stay within their legal limits when it comes to providing merchant accounts for hemp-related companies. So what exactly do they mean by hemp?
The term “hemp” As defined by the Agriculture Marketing Act of 1946, – “means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
This definition is still in use today, and the key part to know is that your hemp products must have less than 0.3% THC. Even the best CBD payment processing companies will ask for Certificates of Analysis or COAs to show that the products you’re selling are within the parameters allowed by federal regulations.
CBD, Hemp & Delta 8 Merchant Accounts
With different types of strands and ways to extract CBD and hemp ingredients, it’s important to find a payment solution that knows the specifics.
Whether you’re looking for a cannabis, CBD, or Delta 8 merchant account, your high risk merchant account should be able to navigate your web store and describe what products are allowed or restricted.
Accepting Debit & Credit Cards
On Shopify’s payment page, they go on to add that you must follow all local, state, and federal laws including the ones enforced in the different areas your customers reside. Lastly, they explicitly say, they CBD cannot be derived from marijuana.
Keep in mind, selling products on their site, and utilizing a merchant account are two very different things. In order to accept credit cards or make direct debit transactions, you’ll have to find a high risk payment gateway for your Shopify hemp store.
If you’re wondering “What payment gateway does Shopify use?”, the answer is they have their own. In 2013, Shopify launched their gateway and merchant tool called Shopify Payments. It allows store owners to go directly through Shopify to get online credit card processing.
Does Shopify Payments Work With CBD?
Unfortunately, Shopify Payments isn’t willing to undertake the risks and changing legal landscape associated with CBD merchant accounts. Nonetheless, there are excellent third-party companies that easily integrate with the platform.
This caveat is part of their Terms and Conditions when you sign up to use Shopify Payments. Therefore, if you’re already using their service, and you plan on adding a CBD or hemp item on your site, you will have to seek out different providers. Otherwise, Shopify may shut down your payment processing and put all of your transactions on hold.
Not to worry, third-party CBD payment gateways have higher thresholds when it comes to regulation. Each has their own banking partners, and conditions. Be sure to find one that will work with you to customize a merchant account for your store.
Shopify Payments Gateway vs Third-Party Gateways
The rates and approval process for third-party gateways are different. Unlike the instant approvals you get from mainstream providers like PayPal or Stripe, high risk account providers, collect more information to create a detailed file for your business. This is reviewed in the underwriting process where banks will compile a specific package for your business needs.
Whether you’re looking for credit card processing or hoping to get started with an e-check solution, your Shopify merchant account should suit your needs. Be sure to look for the best payment gateways for your unique business.
January 7, 2021 | Merchants | Dustin