My Mom once told me that I should interview the company considering me for the job as much as they are interviewing me. This sage advice can easily be applied to merchant services if you are a Hemp Business. Just as your merchant service provider will be looking into your business during the onboarding process you should be looking just as hard into their business.
The merchant services industry is in a transition period, especially when it comes to hemp. Some are in, some are out, and the worst of them all, think they are in and end up being out. When talking to hemp companies around the country, we have found that this indecision, on the part of their merchant service providers, has led to horror stories that are all too common.
For example, a hemp business sets up a merchant account with a company that says they are providing merchant accounts to hemp companies. A few months later the hemp company has their account shut off without any notice or specific reason. To make matters even worse, when they try to call and talk to a representative at the payments company, they receive no information or a path forward. This leaves them in the dark and with a time sensitive mess to clean up before they can resume business as usual.
Knowing these horror stories are all too common, we want to help prevent this situation from happening to you by providing a few tips to root out these “here today gone tomorrow” payment processing companies. The best way to do this is to truly understand your payment processing partner’s stance on Hemp Businesses before it’s too late. Asking the right questions during this process will help you determine whether this potential partner is “all in” on the hemp industry or just another in a long line of Here Today Gone Tomorrow companies.
Below are some tips to help you know who you are “Getting Into Hemp With”.
1. Find a Company That Truly Understands the Hemp Industry
The merchant services industry labels hemp companies as “high-risk” simply because most financial services companies do not understand the industry. It is a fairly new industry to the financial world and the majority of payment processing companies do not want to take the time to learn about the industry and develop expertise in the space.
It is difficult to effectively manage a relationship with your customer if you do not understand how their business operates or even who their customers are. This lack of understanding by the financial industry leads to indecision as to whether or not they will allow hemp companies to operate using their services.
Ensure that the merchant services company you are considering partnering with, for your payment processing needs, truly understands the hemp space and is willing and able to provide you the services needed to thrive as a company. A good rule of thumb is to ask if they have a compliance program specific to the hemp industry. If they do then, chances are, they are committed to serving the hemp industry.
2. Understand Their Relationship with Their Bank
Every payment processing company is required to have a relationship with a bank and when these two entities aren’t on the same page, problems can arise for their customers. Finding out who the banking entity is and then doing a bit of research to gauge the bank’s stance on the hemp or CBD industry will provide tremendous insight into the security of their partnership.
Many payment processing companies are considered “ISOs” (Independent Sales Organizations). It is common for these ISOs to list the bank they are partnered with at the bottom of their website. If you cannot find it listed on their website, you can simply ask them. If they won’t tell you or don’t know, that should be the first and last red flag you need to see before you run for the door.
Once you know the name of the bank that is partnered with the ISO, you can do some research online to see if they have information on their website showing if they actively bank hemp companies. If both the payment processing company and the bank actively market to hemp companies, this is a great sign that they are on the same page about their commitment to the industry.
West Town Payments is proud to partner with West Town Bank & Trust, one of the first banks in the nation to openly support the hemp industry. Having a banking partner that is “all in” on the hemp industry gives us the ability to provide our customers with a stable and secure payment processing service and the confidence that your provider will not shut down your account simply because you are a Hemp Business.
3. Make Sure Your Payment Processing Partner is Vetting Your Business
This may seem counter-intuitive, but you should take it as a positive sign if your payment processing partner is heavily vetting your business. If they simply approve your account without asking many questions, this should be a red flag.
Merchant service companies that have a defined vetting process for their hemp and CBD customers are typically more committed to the industry. This shows that they have done the research to know what they need to ask hemp and CBD companies to ensure they are operating within the limits of both state and Federal laws.
For example, your prospective partner may ask about your testing procedures and want to see results that show that your products are below the 0.3% THC limit set by the Federal government. They may also ask about your connection to any marijuana related businesses as there are Federal regulations specific to these businesses that the payment company must comply with. While vetting these concepts will require a bit more heavy lifting upfront, it will ultimately put you in a position to prosper long-term by eliminating potential future headaches with being shut down.
4. Talk to Their Customer Service Team
Given the complexities and ever-changing nature of the hemp industry, having a payments partner that makes themselves readily available over the phone to discuss any changes to your account is of great importance. Many of the larger institutions are notorious for poor customer service which may leave hemp companies completely in the dark if there are any unforeseen changes to their services.
Before signing up with a merchant services company, ask about their customer service process or even call in yourself to get a sense of how they operate. For many hemp businesses, it’s important to have a personalized touch approach. If that’s the case, find out if their clients have access to a single dedicated point of contact and what the process is if that person happens to be out. This will give you a glimpse of what you can expect if you ever need their assistance with changes or unforeseen issues with your account.
As a hemp company, it is important to partner with the right merchant service provider. The easiest option or the biggest brand name many not always be the best partner for the long-term success of your business. Doing your research and asking the right questions while you are searching for your financial partners can help you mitigate future problems and feel confident in your relationship. Avoid taking this decision lightly as the long-term impacts on your business can be substantial.
About West Town Payments, LLC
West Town Payments, LLC and West Town Bank & Trust have partnered together to offer a full-service banking offering to hemp and CBD businesses. West Town Payments provides compliance-focused, technology-enabled payment processing solutions to merchants throughout the U.S. We offer a highly secure, comprehensive commerce platform for physical point-of-sale, online, contactless and mobile payments, with West Town Bank & Trust providing merchant deposit accounts and treasury management services on the back end. As champions of the hemp industry, we are well-equipped with the experience, resources and compliance-driven framework that gives our hemp customers confidence in their financial partnerships.
About the Author: Tom Lineen is the Co-Founder and CEO at West Town Payments. With over 20 years of payment solution expertise, he effectively navigates and advocates for compliance-driven and traditional business verticals, through old-fashioned values centered around integrity and transparency coupled with innovative, modern technology. Along with his strategic leadership roles in FinTech companies, he is an active angel investor, board member, mentor, and advisor to several exciting and disruptive companies in the predictive analytics, B2B payments, and Insurtech space. To learn more visit www.westtownpayments.com or email firstname.lastname@example.org.