Ask the Experts: Merchant Processing: 5 Questions with Eric Kaufman

April 15, 2020

Many people make most or all of their retail purchases with a credit card, raising questions of how dispensary customers can easily pay for product, as major credit card companies won’t accept cannabis transactions. Dama Financial’s Chief Revenue Officer Eric Kaufman talks about payment options—including the Paytender cashless payment solution—for cannabis retailers, why transparency is important and the risks involved with cash transactions.

1. Can dispensaries accept credit cards and still remain compliant?

No. All the major credit companies have announced their stance on cannabis transactions and will not accept them over their networks. Paytender accepts payment via debit card or directly from the customer’s bank account, as these payments do not go over credit payment rails.

2. What credit options can dispensaries offer to customers?

Paytender is developing a credit program that will allow customers to qualify for a line of credit that they can then use at all dispensaries that accept Paytender—in-store, online or at delivery. Paytender will be able to offer this to customers as an alternative to paying with cash.

3. Are most merchant processors in the market transparent, meaning customers and businesses see the cannabis transaction?

Many processors in the market try to hide the cannabis transaction so that the bank doesn’t see it, or they will process them through shell companies. This non-transparency creates constant unease to the business holder, with a fear of being shut down at any moment. Paytender is fully transparent, where the bank, customer and business all see the transaction.

4. Is cash a sustainable payment alternative?

Cash comes with risk, including theft and loss. We’ve seen dispensary sales dip 30% when they don’t accept digital payments. Paytender gives dispensary customers the kind of purchasing experience they have come to expect, which makes the pool of potential customers larger, as many people simply never pay with cash.

5. Is it necessary for processors to hold dispensary earnings?

It is absolutely unnecessary for processors to have rolling reserves, meaning they hold a percentage of the merchant’s sales for an undetermined amount of time before releasing funds. Paytender provides same-day settlement of the merchant’s funds into their compliant merchant bank account. They always have prompt access to their earnings.

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