How Non-Cash Payment Options Could Benefit the Cannabis Industry
Can you imagine a world where cash, not credit, is king? In this alternate universe, all the conveniences we take for granted in the golden age of ecommerce — including higher spending limits, payment plans, and safe, frictionless retail experiences — would cease to exist.
That’s the reality in the cannabis industry. Due to federal regulations that block canna-businesses from accessing many banking services, cash and debit (also known as “cashless ATM”) are the only payment options for cannabis consumers and merchants — and recently, even cashless ATMs in dispensaries have been called into question. As a result, both dispensaries and consumers must deal with archaic issues like hidden transaction fees, slower service, and the security risks associated with carrying cash.
Cannabis is becoming a sophisticated and modern consumer product, but today’s retail experiences fail to reflect where the industry is heading. Let’s take a look at three primary ways non-cash payment options could not only benefit cannabis merchants and consumers but also maximize efficiency across the entire industry.
1. Frictionless transactions
The absence of non-cash payment options, also known as credit payments, in cannabis creates a less-than-ideal shopping experience for consumers. If customers choose to pay with cash, they first need to ensure they have enough on hand to make the purchase. If they fail to plan ahead, their first stop is likely the on-site ATM that charges a hefty withdrawal fee, often accompanied by a fee from the consumer’s bank. Starting a dispensary visit with unnecessary charges certainly will put a damper on anyone’s purchasing experience.
Paying via debit also can incur hidden fees. Despite being called “debit,” these actually are cashless ATM transactions. Real bank debit transactions — as when using a debit card at a gas station or grocery store — are off limits due to federal prohibition. And since the transaction is a simulated ATM withdrawal, dispensaries are required to round up the total to the nearest $10 and provide the change back in cash and coins. This can be a confusing process for first-time customers. For regulars, it’s simply a hassle they have to tolerate every time they shop in a store.
Lack of credit also complicates the payment collection process for merchants, especially for ecommerce orders. Since customers are unable to pay online with a credit card, stores must collect payment upon delivery or in-store pickup. The system is vexing for retailers, who are left wondering whether the customer will ever arrive to collect their pre-order or have enough cash on hand to cover a delivery order.
Introducing credit payments would streamline the process for people on both sides of the transaction, offering customers a simplified buying experience and merchants a sense of certainty.
Cannabis is becoming a sophisticated and modern consumer product, but today’s retail experiences fail to reflect where the industry is heading. Let’s take a look at three primary ways non-cash payment options could not only benefit cannabis merchants and consumers but also maximize efficiency across the entire industry.
1. Frictionless transactions
The absence of non-cash payment options, also known as credit payments, in cannabis creates a less-than-ideal shopping experience for consumers. If customers choose to pay with cash, they first need to ensure they have enough on hand to make the purchase. If they fail to plan ahead, their first stop is likely the on-site ATM that charges a hefty withdrawal fee, often accompanied by a fee from the consumer’s bank. Starting a dispensary visit with unnecessary charges certainly will put a damper on anyone’s purchasing experience.
Paying via debit also can incur hidden fees. Despite being called “debit,” these actually are cashless ATM transactions. Real bank debit transactions — as when using a debit card at a gas station or grocery store — are off limits due to federal prohibition. And since the transaction is a simulated ATM withdrawal, dispensaries are required to round up the total to the nearest $10 and provide the change back in cash and coins. This can be a confusing process for first-time customers. For regulars, it’s simply a hassle they have to tolerate every time they shop in a store.
Lack of credit also complicates the payment collection process for merchants, especially for ecommerce orders. Since customers are unable to pay online with a credit card, stores must collect payment upon delivery or in-store pickup. The system is vexing for retailers, who are left wondering whether the customer will ever arrive to collect their pre-order or have enough cash on hand to cover a delivery order.
Introducing credit payments would streamline the process for people on both sides of the transaction, offering customers a simplified buying experience and merchants a sense of certainty.
Originally published at https://mgretailer.com/business/retail-merchandise/how-non-cash-payment-options-could-benefit-the-cannabis-industry/ on November 30th, 2021.
