Everything You Need to Know about Square Payments for CBD

May 07, 2021
square payments for cbd

The Low-Down on Square Payments for CBD

If you’re selling CBD products online, you may have considered processing with Square payments for CBD. Square’s one-size-fits-all eCommerce solution is popular among small low-risk merchants, but its CBD solution is still a work in progress. As a result, Square CBD merchants may miss out on customized features and benefits from processors that specialize in the high-risk CBD industry.

Selling Cannabis Online: Rules & Regulations for Merchant Services 

Online sales of cannabis and CBD products are subject to federal and state regulations. A knowledgeable CBD processor can guide you through compliance requirements, which vary by state. The U.S. Food and Drug Administration (FDA) has established strict guidelines for products containing cannabis or cannabis-derived compounds, including cannabidiol (CBD). The FDA’s Federal Food, Drug, and Cosmetic Act (FD&C Act) make it illegal to market CBD as a food additive or dietary supplement or to make any unproven claims about its health benefits. 

Selling cannabis and CBD online can also be tricky in some states. Understanding how government agencies assess your business can keep you up to date and compliant with ever-changing state and federal guidelines, which assign different degrees of risk to each of these business categories:

Tier 1: If your business produces marijuana-based oils or byproducts, either by growing, harvesting, processing, transporting, or selling seeds or plants, you’re a Tier 1 merchant, which carries the highest degree of risk, according to regulators, banks, and processors. 

Tier 2: If your business supports Tier 1 merchants with activities such as consulting services, physical products that help growers and shippers, or organizing industry trade group activities, you’re a Tier 2 merchant. While your business is part of the CBD industry, it is not directly involved in the growth, transport, or sale of cannabis and CBD products. Your business-to-business (B2B) focus is considered less risky by regulators, banks, and processors.  

Tier 3: If your business provides ancillary products or services to Tier 1 merchants that would be like other types of businesses, such as transporting cash or providing fertilizer or accounting services, you’re a Tier 3 merchant. Your products and services are generally easier to approve by regulators, banks, and processors because they are considered immaterial to Tier 1 merchants and carry less risk. 

While these categories may be subjective to the bank that is boarding your account, they fall into predictable patterns. Tier 2 or Tier 3 cannabis merchant accounts have better approval rates because their products or services are only tangentially related to the cannabis business. For example, companies that provide packaging, testing, marketing services, or shirts with cannabis designs qualify for Tier 3 cannabis credit card processing.

Cons of Square Payments for CBD Merchant Accounts

When you consider the challenges involved in winning approval to process CBD payments online, it makes sense to choose a processor that will be with you for the long ride. Are you willing to take a chance with Square CBD, which is still in test mode? Wouldn’t you prefer to rule out uncertainties by choosing a processor with a proven track record in the CBD space?

If you roll the dice with Square CBD, which is still in test mode and charging more than its advertised rates for low-risk merchants, you’re taking a chance on the future. And you’re hoping the company doesn’t change its policies and take down your account for simply selling CBD. 

Square CBD Payment Processing RatesA Side-by-Side Comparison

Breakdown of WizoPay rates: 

  • Online: 2.99% + .25 per transaction 
  • In-person: 2.79% + .10 per transaction 
  • Keyed-in: 2.99% + .15 per transaction

Here is a breakdown of the rates Square Payments for CBD:

  • Online and In-App: 4.2% + $0.30 per transaction
  • In-Person: 3.9% + $0.10 per transaction
  • Keyed-In and Card on File: 4.8% + $0.15 per transaction


To summarize, if you’re selling cannabis-derived compounds or CBD products and services online, we commend you for blazing a trail in a young, unregulated industry. A knowledgeable payment processor can keep you current with ever-changing rules and regulations. A processing partner that specializes in high-risk CBD accounts will do more than just process your payments. Your partner will bring industry knowledge and opportunity to the relationship. These assets will help you grow and scale your business, from setting up legitimate bank and processing accounts to attracting and retaining customers. 

Square CBD is not cheap and it’s not even in full production mode. By the time it is fully tested and certified, the service may not even give you the highly specific and specialized tools you need to be successful and process transactions online. In addition, Square’s guidelines restrict merchants from selling and marketing hemp-based products that contain no more than 0.3 percent THC and even these products are not always legal to sell in all 50 states. When you take that important first step and begin to look to processors beyond Square CBD, you’ll find a wealth of processing options, benefits, and support beyond anything that Square can provide. 

Why wait to set up your eCommerce store when affordable, purpose-built tools for high-risk CBD processing are a call or click away? If you have an online business selling CBD, now is the time to look for a payment processing solution that is fully vetted and market-ready. Luckily, WizoPay specializes in high-risk merchant accounts for CBD. 

Contact us today to learn more about how we can help!


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