Payment processing is a problem for dispensaries all over the US. Most merchant service providers avoid this industry for fear of aiding and abetting federal crimes. Unfortunately, this pushes both the state-licensed dispensaries and their registered cardholding patients to rely excessively on physical cash for transactions. This is a problem because it puts everyone, including the general public, at a higher risk for crime, theft and fraud.
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A cashless debit card terminal is a good option for reducing reliance on physical cash: A small, card-reading terminal sits on the counter, and patients simply slide a debit card and enter their PIN number to make a transaction that is deducted from whatever account is linked to the debit card. The process is similar to an ATM.
For a dispensary, the cost of operating the terminal is negligible. And the patient pays only a small, industry-standard, out-of-network fee. Overall the amount of cash on the premises is greatly reduced, which improves the dispensary’s safety and security for both patients and staff.
Cashless ATMs for cannabis dispensaries:
- Nominal start-up costs
- Eliminates risks associated with a cash-filled ATM in a lobby or waiting area
- Fees equal to out-of-network ATM charges – a small expense for the convenience
- Easy to use card terminals require very little counter space
- System creates direct electronic bank deposits
- Increases sales by accommodating impulse purchases
A quick word about traditional ATMs: roughly half of the nation’s 420,000 machines are bank owned – meaning the other half are owned by small companies leasing these machines out. Many, if not most, ATMS run on Windows XP, which as of April 8 2014 is no longer supported by Microsoft – so there are no patches or security fixes forthcoming. Once the first XP machine is hacked, none will be safe.
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Why not offer Visa and/or MasterCard? Because neither company will knowingly process cannabis purchases. Unscrupulous vendors will set up a client’s payment terminals to miscode transactions as something they are not in order to mislead the card processor. (By the way, Square is also off-limits.)
While this may be convenient for customers, it most definitely is not for business operators when said processor discovers the true nature of the business – and they do find out. Those merchants can then spend months recovering funds being held by a card network.
Additionally, these business owners run the risk of being added to the Terminated Merchant File. Being “TMF’ed” (aka put on the MATCH List) is to be blacklisted, with one’s name, business name, even Social Security number attached – and it is difficult and time consuming to win removal from this roster. Few who’ve ever had the experience would try a similar charade again.
One day the credit card companies will provide services. Until then, patients can swipe their debit cards at cashless ATM terminals to make legal cannabis purchases, while merchants enjoy direct electronic deposits and freedom from the risks associated with being an all-cash business.
Contact US Debit Services | Jon Graves | 855-749-6121 for more information
US Debit Services was created to provide safe, secure and convenient payment processing options to the legal cannabis industry. Our goals are reducing the amount of cash that customers must carry and business owners must handle while providing transparent reporting and accounting for regulators. US Debit Services systems are currently processing transactions in Arizona, Colorado, Oregon and Washington.