Frequently Asked Questions
Isn't Credit Card processing for marijuana ​illegal?
T​here is nothing illegal about credit card processing for marijuana. That is a misnomer. The credit card networks have publicly stated they are not opposed and defer the decision to the acquiring banks. I have attached the WSJ article where Visa and MasterCard have publicly stated their position.
http://www.wsj.com/articles/SB10001424052702304887104579304970273466300
Here is the quote from Visa: Visa said in a statement that it follows federal law and tries to prevent the network from being used unlawfully. But it added that "given the federal government's position and recognizing this is an evolving legal matter with different standards applicable in different states, our local merchant acquirers are best suited to make any determination about potential illegality."
Visa and MasterCard are not opposed to marijuana transactions on their network and recognize the conflict in law between Federal law and states’ rights. The same argument can be made for any form of banking that it is illegal because it is Federally illegal. However, the Senate defunded enforcement by the DOJ and FinCEN came out with guidance that makes it clear they do want banks participating as long as they can comply with the proper oversight and controls.
The key for credit or debit card processing is finding an acquiring bank who is comfortable with processing marijuana transactions and transparent about it, meaning they do not make attempts to mask the nature of the business by calling the merchant a flower shop, or some other false pretense.
In this case, our company has a relationship with an acquiring bank who is comfortable processing marijuana transactions and are not concealing the true nature of the underlying business.
I am already accepting credit cards. Why should I switch?
Today, all other companies that offer merchant accounts to cannabis retailers require the dispensaries to list themselves as another type of business. This falsification on your merchant agreement puts your business at risk. Though it has yet to be prosecuted, most legal counsel would advise against unnecessarily putting your business in this position.
Additionally, when the Processor or Acquirer discovers a breach in merchant contract, they will shut down your account and could also put you on what is known as the “match list,” making it difficult or impossible to get a merchant account in the future.
Why is the VATM system better and more profitable than having an ATM in the store?
VATMs operate through the debit network. Debit networks cannot perform credit card transactions, so credit cards will not work in an ATM unless the cardholder knows his or her pin number. Even with a pin number, the transaction is not a credit card transaction. Instead, it opens a loan on the cardholder’s credit card account and lends out a cash advance. Our VATM runs on the credit network, so the cardholder actually purchases product, rather than taking out cash.
The VATM is not only more convenient to the customer, but is also much less likely to get shut down. To have an ATM in store, your dispensary must sign a contract with an Network Services Provider, and oftentimes, in order to get the Provider to agree, you may have to disguise your dispensary as another business. ATMs at dispensaries get shut down by the Acquirers when they discover this breach in contract liability, because the Acquirer didn’t consciously decide, with their lawyers, to go into the cannabis business. What makes us different, and puts your dispensary at a much lower risk, is that we already have an Acquirer who has agreed to take on the legal risk of making marijuana sales transactions. To have our VATM in your store, you do not need to disguise the nature of your business.
ATMs also require constant upkeep to stock them with cash. Inevitably, when your store is at it’s busiest, like during a holiday or an unexpected rush, is when your ATM will be out of cash. This will cost you sales. Not to mention, having a machine stocked with cash in your store increases your chance of theft.
Why does Fortress Payment Technologies charge a 5.9% and 30-cent fee as well as the $3.50 ATM fee? How will these charges be profitable to my dispensary?
With marijuana businesses, there are numerous risks for which to account. The cannabis industry has not been around long enough to have a risk profile, and the laws surrounding it are constantly changing. Marijuana sales are also subject to money laundering laws, so there are financial security risks, too. Thirdly, our Acquirer takes on a hefty risk for accepting all forms of credit and debit payments without requiring a pin number. We have a large legal contract with our Acquirer, so we need to charge 5% to cover their risk. These three factors make it necessary financially and legally for us to charge a 5.9% fee.
The good news, however, is that the risk involved in accepting credit cards also comes with a reward. As with any business, if you allow a variety of payment types, people are going to buy more. Dispensaries that accept credit cards directly have seen their total sales increase from 10-15% in some cases considerably more. The best practices in retail that The increase in credit card sales will bring far more profits into your dispensary than a regular ATM, so the fees we charge will become negligible in the long run.
What if the banking situation improves and card processing rates decline?
Your VATM provides the most modern secure processing technology available and Fortress Payment Technologies can provide as competitive rates as anyone on standard processing accounts. As the industry becomes more mainstream, we will be able to continue to keep your rates at par or better than the competition. We are so confident of this we have built the commitment into our processing agreements. Fortress Payment Technologies guaranties we will always provide the lowest cost method of accepting ALL credit cards legally - PERIOD.
I have a Bank or Credit Union. Do I still need your services?
Banks and Credit Unions have the same problem providing merchant services to dispensaries as all other providers. They also have to find a qualified sponsor bank and an Acquirer willing to underwrite your merchant account.
Provided you are lucky enough to have found a Bank or Credit Union to work with you, you or they would still have to source credit card services. We would be happy to discuss this as an opportunity with your Bank or Credit Union.
How does Fortress Payment Technologies differ from PayQwick?
PayQwick is a similar service that does not accept all forms of credit card payment from your customers' wallets, including Visa, Master Card, American Express and Discover. PayQuick requires their customers to open a new and separate account and would have to be adopted by large numbers of individuals, much like a Target Card, which is only good at Target. Customers want to pay with the cards they carry and use everywhere, which is a service we at Fortress Payment Technologies can provide.