I work for cannabis companies and it's the same story.
You get banned from Paypal, Stripe, Authorize.net, and all the other major services. If you're lucky, you get setup on Shopify and bounce around 3rd party payment processors. Most of the time though, you end up in a similar situation, doing e-checks/wire transfers, or buying "potcoins" that convert currency.
It's hell, and every time I talk to someone outside of my industry about it, they always ask dumbfounded: "Why don't you just use Paypal or Stripe?". And when I tell them I've been banned from them, and had thousands of dollars of money frozen and stolen -- they act flabbergasted, and don't have anything else to add -- because the fact of the matter is - there's no good answer.
I can't tell you how many times I've been approached by scam artists who try to sell me payment processing for my cannabis e-commerce clients. It's popular for a lot of ancillary service firms (like graphic designers) to spin off and create a "payment processing solutions" company that acts as a middleman for smaller banks and processors. They get 1%, sometimes more, of your transaction as an "affiliate fee" from the bank. So it becomes lucrative for these scumbags to try to set everyone up with their shitty service, grab as much cash from the middle, and split once the service stops (whether they get shut down or move on to more legitimate clients). Which sucks for businesses that wake up randomly one morning and have to turn away 50%+ of their customers cause they didn't come with cash.
I wrote an article on my blog about my process of contacting over 100 different processors in the US (and internationally eventually) and getting denied for being a business related to cannabis (not even selling weed! just associating the brand with it and selling services like graphic design or tshirts).
I appreciate you sharing your experience and particularly the technical hoops you had to jump through. It's a struggle few devs understand until they step into the grey area industries.
I don't work for cannabis or adult industry, but I am from Ukraine and that is the only reason why paypal and stripe dont want to let me accept payments and this is the same hell.
What's the reason given, if any? I'm very surprised. Given that it's a legal business in the area, the processors should be happy to have customers, no?
Also look from the other side. Let's say you are an illegitimate business, actually selling the weed. You notice you are not accepted at any of the merchants. How would you hide your business?
One way would be to pose administratively as a graphics company, having nothing to do with the product itself. And then continue still sell the weed under the counter. Problem solved!
But the merchants covering you, have the same problems as with the actual companies selling weed. So, it's cheaper to deny hundred weed related companies, knowing there will be X in there which are actual proper companies. Way better than either accepting the risk on X or spending money to actually find out who is X and who is not.
I'm a fan of playing devil's advocate, but that wouldn't make sense in practice.
People run fake businesses already, particularly the people who run illegal medical marijuana delivery services.
The easy part? They pose as a graphics company. Not a ganja-specific graphic design company. It's easier to spoof when you don't associate. The issue we faced was that we were up front about our business and practices, whereas the criminals wouldn't be. Why put a weed leaf on my cover business? My dirty accountant would strangle me 😅
It's more of an issue with the federal legislation (with cannabis), and in some cases (like the adult industry) they avoid businesses that receive a lot of chargebacks.
I actually had issues getting processing for legitmate, non-cannabis design companies because professional services are more prone to chargebacks (and more difficult to prove receipt than physical retail goods). I've had clients chargeback, and even with screenshots, server logs, and a contract-- and the bank/credit company still sides with the client. And small claims court isn't an option for out-of-state/international clients (one of the major issues with working remote).
There's usually no explicit reason given. And if you shake them down, they point to their TOS that states no cannabis and say you can't feature any reference to it on your website (or even social media).
It's a legal business in terms of local or state municipality, but it's still illegal on a federal level. And since all banks/credit cards are managed on a federal level by the FDIC. They risk their federal license/status if they operate with federally illegally businesses. So you end up working with smaller banks/processors that are on a lower profile, and are willing to risk their license.
You can find local processors happy to have customers, but they overcharge you 10%+ in fees (versus Paypal's 2.3% or whatever). They take so much risk they overcharge to cover it. And they tend to only offer bank wires/e-checks, since credit card processors/bank debit won't even take the risk.
I can understand your feelings. I can think of a solution that works well in my country(India).
COD either Cash or Card on delivery.
Flipkart an Indian E-commerce site, faced the same problem, because people didn't trust unknown vendors or 3rd parties for prepaid deliveries.
Flipkart introduced cash on delivery in India. Now even Amazon India has such option.
When GOI(Government of India) banned 500 and 2000 buck currencies, sites like amazon and flipkart issued card processing machines with the delivery guys.
You might try those things if you are selling anything online
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