How to Expand Your CBD Business to a New Market Without Payment Issues?

The CBD market is expanding exponentially. In fact, the size of the global market for cannabidiol was estimated at USD 2.8 billion in 2020, and it is projected to rise at a compound annual growth rate (CAGR) of 21.2% between 2021 and 2028.

A growing number of CBD agencies are opening up around the world. 

The growth doesn’t include new CBD businesses. Even the existing businesses are expanding their presence across the state, country, or even the world. 

However, regardless of the growth, expansion, or legalization of CBD, these businesses face a range of challenges when it comes to managing payments throughout their operations. This challenge becomes a barrier to seamless expansion, making expansion difficult and at risk. 

In this blog, we’ll be discussing how to expand your CBD business to new markets without payment issues. 

Let’s get into it 

Also Read: How to Start a CBD Business 

Navigating the Legal Landscape for CBD Payment Processing

The legal landscape of CBD payment processing is complex and multidimensional, driven by a variety of state and federal regulations. At the federal level, the 2018 Farm Bill made hemp-derived CBD products with less than 0.3% THC permissible.

However, under many state laws, the legality of CBD is still unclear, which affects banks’ and financial institutions’ desire to work with CBD enterprises. This hesitation originates from concerns about regulatory and legal consequences, making it difficult for CBD businesses to obtain typical payment processing services.

To navigate this landscape, businesses must be aware of current legislation and regulations at both the state and federal levels, since these can have a considerable impact on payment processing alternatives.

Additionally, working with payment processors who specialize in high-risk sectors and have dealt with CBD firms before can offer more specialized solutions and direction through the intricate regulatory landscape.

Understanding the legal complexities and working with competent payment processors can assist CBD firms in establishing secure and compliant payment processing systems, despite the hurdles presented by the regulatory landscape.

Also Read: Why do CBD Business Struggle With Payment Processing

How to Expand Your CBD Business to New Markets Without Payment Issues?

Expanding a CBD business into new markets presents a major growth opportunity in the growing CBD business market. However, CBD business faces a lot of restrictions and diverse challenges(especially when it comes to managing payment) – which become a hurdle in business expansion. 

Below, we’ll be covering the challenges that CBD businesses face related to payment while expanding to new markets and its effective solutions. Let’s get to it. 

1. Difficulty in Securing Payment Processing in New Markets:

Challenge: When entering a new market, CBD businesses often struggle to find payment processors that operate in that region. Many mainstream providers don’t support CBD transactions, while others may not have coverage in the target country or state. This makes it difficult to accept payments from new customers.

And, there are so many things that CBD businesses need to handle – so they can’t just spend their time finding another payment processor when expanding. Also, it becomes difficult to communicate different payment methods while you have the same channels for marketing. 

Solution: The solution for this is to partner with partner with an international CBD-friendly payment processor that operates in multiple markets. These providers specialize in high-risk industries and offer merchant accounts tailored to CBD businesses. Some CBD payment processors specialize in global transactions and offer multi-region support, local banking partnerships, and customized payment solutions to help businesses expand smoothly.

You might not find a single payment partner for all your chosen locations, but choosing international providers who operate in multiple locations will make the expansion easier. 

Also Read: Secure Payment Processing for CBD Ecommerce

2. Compliance with Different Payment Regulations:

Every country—and even different U.S. states—has its own CBD regulations affecting payment processing. 

Some regions require additional licensing, specific banking relationships, or limit the types of payments that can be accepted. But, when you are expanding – you might tend to neglect these things or it might become overwhelming. But, it’s important and failure to comply can lead to frozen funds or sudden account closures. 

Solution: As we have stated earlier, work with an international CBD payment processor who ensures compliant payment processing in the region that you are expanding for. 

If your current provider is not compliant, then you can look out for a CBD-compliant payment processor that understands local regulations and can guide you through the process. Additionally, consult a legal expert to ensure your business meets all licensing and banking requirements in the new market before launching.

Also Read: How to Avoid Frauds and Chargebacks in CBD Payment Processing

3. Managing Cross-Border Transactions and Currency Exchange:

Challenge: Expanding into international markets means dealing with multiple currencies, exchange rates, and foreign transaction fees. Without a reliable payment processing solution, businesses may lose money due to fluctuating exchange rates and high conversion fees. You don’t understand the challenges and uncertainties until you actually expand. 

Solution: So, while choosing the CBD payment processor, even when you are not thinking of expanding choose a scalable processor that grows with you. 

You should look for a payment gateway: 

• that supports multi-currency transactions with competitive exchange rates. 
• offer dynamic currency conversion
• allowing customers to pay in their local currency while ensuring businesses receive payments efficiently. 
• that integrates with global banking systems to streamline cross-border transactions and reduce unnecessary costs.

Also Read: How Fast Payouts can Improve the CBD Business Cash Flow 

4. Increased Chargeback Risks in New Markets:

Challenge: Expanding into unfamiliar markets increases the risk of chargebacks and fraudulent transactions. New customers may have different expectations regarding product quality, delivery times, and refund policies, leading to higher chargeback rates. Some payment processors penalize businesses with frequent chargebacks by increasing fees or How to Terminating accounts.

Solution: While expanding into new markets, a strong chargeback prevention strategy ensures a smooth expansion process while maintaining a good standing with payment processors.

Here are some of the best practices to follow: 

• Use the compliant payment processor with fraud detection and chargeback protection tools to flag suspicious transactions.
• Clearly outline refund and return policies on the website to set customer expectations.
• Provide order tracking and transparent shipping information to reduce disputes related to lost or delayed shipments.
• Offer 24/7 customer support to resolve issues before they escalate into chargebacks.

Also Read: How to Integrate CBD Payment Solutions With Ecommerce Platform

5. High Processing Fees and Reserve Requirements in New Regions

Challenge: Some payment processors impose higher transaction fees or rolling reserves (which means a portion of funds is withheld for potential refunds or disputes) when businesses operate in multiple markets. This can strain cash flow and make expansion more expensive.  

Solution: Choosing a processor with transparent pricing and flexible reserve policies can help businesses is quite important to manage cash flow effectively while expanding. Here’s what businesses can do. 

• Compare multiple CBD payment processors to find competitive pricing and lower reserve requirements.
• Negotiate better processing rates with providers based on transaction volume and business history.
• Diversify payment processors to avoid relying on a single provider, which reduces the impact of high fees or sudden account closures.

Quick-Tip: In this case, using multiple payment processors can also help reduce reliance on a single provider and minimize reserve requirements.

Also Read: How Much Money is Needed to Start a CBD Business

6. Difficulty Integrating Local Payment Methods:

Challenge: Each market has different consumer payment preferences. While credit and debit cards are popular in the U.S., some regions in the USA prefer digital wallets (e.g., PayPal, Apple Pay, Google Pay), direct bank transfers, or cash-based payments. If a CBD business only accepts a limited range of payment options, it risks losing customers in the new market. 

For example, in Germany, many customers prefer bank transfers (SEPA payments) over credit cards. In China, WeChat Pay and Alipay dominate digital payments. When you fail to offer preferred local payment methods, it can result in lower conversion rates and abandoned carts, reducing revenue potential.

Solution: The solution for this is understanding the market and audience you are catering to. If the market and region you are expanding are comfortable with your payment options, then go for it. And, if not – then you need to partner with the local CBD merchant solution. 

Here are some tips: 

• Choose a CBD-friendly payment gateway that integrates with credit cards, digital wallets, bank transfers, and local payment solutions.

• Ensure the checkout process is mobile-friendly since digital wallets and mobile banking are widely used worldwide.
• If you feel the need to partner with the local CBD merchant partner, then look for a reliable one that can be easily integrated into the current process and tools to ensure seamless expansion, best customer experience and growth. 

A diverse payment system is very important – that boosts trust and accessibility, leading to higher sales and customer retention in new markets.

Also Read: Integrating CBD Payment Solutions with eCommerce Platforms

7. Bank Account Closures Due to High-Risk Classification:

Challenge: Many banks still refuse to work with CBD businesses due to legal uncertainties and the industry’s classification as high-risk. This problem becomes more severe when entering new markets, where local banks may have stricter policies. It can lead to sudden account closures, frozen funds, and rejected transactions which further leads to delayed payments, difficulty processing refunds, and reputation damage, making it harder to secure banking services in the future.

Solution: To avoid sudden account closures, businesses should: 

• Work with CBD-friendly banks who specialize in high-risk industries and understand CBD regulations in the region that you are expanding. 
• Having backup accounts ensures continuity if a primary account is closed and diversifies risk.
• For international expansion, offshore banking can offer more flexibility. Look for offshore banks that cater to CBD businesses for support and reliability. 
• Work with a payment processor that offers integrated banking solutions to reduce the risk of sudden account terminations. 
• ✔ Maintain proper documentation of transactions, business licenses, and compliance documents that prove legitimacy.

 

Also Read: How to Open CBD Bank Account

8. Slow Approval Times for Merchant Accounts:

Challenge: It is not easy for businesses to get approval and they will experience long wait times when applying for merchant accounts in new markets. This is because payment providers conduct extensive risk assessments, banks and processors may require detailed records and legal compliance proof and even some countries have stricter regulatory requirements for CBD-related businesses.

The delay can lead to:

• Missed sales opportunities due to the inability to process payments.
• Delayed market entry, slowing down expansion plans.
• Increased operational costs, as businesses may need to rely on expensive temporary payment solutions.

Solution: Here are some of the steps to speed up the approval process and expansion: 

• Apply in advance, you shouldn’t wait until launching in a new market. Start the application process weeks or months before expansion to avoid delays.
• Choose pre-approved CBD merchant accounts to reduce wait times.
• Work with specialized CBD payment providers for quicker approvals.
• Ensure all documentation such as a business licensee, finance records, regulatory compliance, etc are ready.

 

Also Read: How to Get a Merchant Account for CBD Business

9. Difficulty Finding CBD-Friendly Payment Processors in New Market

Many major payment providers (PayPal, Stripe, and Square) still refuse to process CBD transactions due to federal and banking restrictions. And, while expanding into new markets, businesses often struggle to find local payment processors that accept CBD payments.

And, even if they do accept – they charge higher transaction fees and a higher percentage of reserves at the start. And, even after submitting an application – CBD businesses can face rejected applications 

Solution: Here are some of the best tips to find CBD-friendly payment processors in the new market: 

• Research well and look for a CBD-compliant payment processor who specializes in the high-risk industry in the market you are expanding. Partner with CBD-compliant payment processors. 
• When you have the best ones, inquire about their support, payment processing fees, reserves requirements, etc to find the right provider.
• Research CBD-friendly banks in target markets to ensure smooth payment processing.
• Offer alternative payment methods such as ACH transfers, eChecks, or crypto payments as backup options.

Also Read: Why do CBD Business Struggle With Payment Processing

10. Delayed or Frozen Payments Due to Compliance Issues:

Challenge: Delayed or Frozen Payment is one of the common problems that CBD businesses face, especially when expanding to new markets and regions. Even if a payment processor approves a CBD business, transactions can still be delayed or frozen which can disrupt cash flow and delay order fulfillment, leading to customer complaints and chargebacks.

Solution: To frozen payment, chargebacks, or more such problems, here are some of the best practices that CBD businesses should follow while expanding to new markets: 

• Ensure full regulatory compliance before expansion by submitting business licenses, certificates, and compliance documents to payment processors in advance.
• Work with a CBD payment consultant who can navigate banking relationships and compliance in new regions.
• Use multiple payment gateways as backups to reduce reliance on a single provider.
• Monitor transactions for suspicious activity and set up fraud detection tools to avoid account flags or freezes.

If you are Looking for the Right Payment Processor, CBD Merchant Solutions has got you Covered! 

Expanding a CBD business into new markets presents several payment processing challenges. But, don’t you worry – we have got you covered. CBD Merchant Solutions addresses above challenges effectively, positioning us as an ideal partner for CBD businesses aiming to expand seamlessly.

1. Compliance with Diverse Regulations:

We at CBD Merchant Solutions understand the ever-evolving market and we keep our platform updated to ensure compliance with diverse and changing regulations. CBD Merchant Solutions emphasizes strict adherence to regulations, minimizing risks associated with non-compliance – and providing businesses with peace of mind as they expand into new regions.

2. Preventing Chargebacks and Fraud in New Markets:

When you are expanding your CBD business to unfamiliar regions – it increases chargeback risks due to differing consumer expectations and fraud concerns. At CBD Merchant Solutions, we provide advanced fraud detection tools, chargeback protection, and EMV chip technology to prevent unauthorized transactions. 

Our systems also support real-time transaction monitoring and dispute resolution tools, helping businesses maintain a strong payment reputation and avoid account terminations due to excessive chargebacks.

3. Fast and Scalable Payment Processing for Long-Term Growth:

Expansion requires a payment processor that grows with your business. Our solutions are designed for scalability, whether you’re entering new local markets or expanding internationally. By partnering with CBD Merchant Solutions, businesses can future-proof their payment processing and focus on growth without worrying about financial roadblocks.

4. Reducing High Processing Fees and Reserve Requirements: 

CBD Merchant Solutions offers zero-fee credit card processing so that CBD businesses can keep 100% of their revenue. Additionally, our competitive pricing structure and transparent reserve policies help businesses maintain healthy cash flow while scaling operations. We also work with multiple banking partners to offer low-cost, flexible processing solutions, reducing financial strain during expansion. 

5. Managing Cross-Border Transactions:

We provide a payment gateway that supports multi-currency transactions, allowing businesses to accept payments in various local currencies while receiving settlements in their preferred currency. With competitive exchange rates and low foreign transaction fees, we make cross-border payments hassle-free, helping businesses reach international customers effortlessly.

6. Reliable Banking Partnerships:

With approved processing solutions for CBD businesses, CBD Merchant Solutions helps businesses avoid issues related to bank account closures due to high-risk classifications. We have established healthier relationships within the financial sector and offer stability and reliability, essential for businesses entering new markets.

7. Enhanced Security:

At CBD Merchant Solutions, we prioritize security by offering EMV terminals equipped with advanced chip technology followed by contactless and PIN-enabled devices. Additionally, our PCI-compliant payment gateway encrypts transactions, safeguarding sensitive customer data and ensuring compliance with industry standards.

8. Seamless Accessibility:

With our cloud-based virtual terminal, businesses can accept transactions without the need for physical hardware. Whether accepting payments over the phone, sending invoices, or handling online orders, our virtual terminal provides a simple, efficient, and secure way to manage payments from anywhere. With real-time transaction tracking and easy integration, businesses can offer a smooth payment experience with maximum flexibility, regardless of the expansion region. 

9. Comprehensive Support and Innovation:

Beyond payment processing, CBD Merchant Solutions offers on-the-go support, ensuring assistance is available 24/7. We are committed to delivering innovation and comprehensive solutions, dedicated to the sustainable growth and success of CBD businesses in new markets.

10. Fast and Reliable Online Payment Processing:

At CBD Merchant Solutions, we ensure that businesses can process online payments seamlessly through our secure payment gateway. Our system supports credit card processing, ACH payments, and recurring billing, so businesses can offer diverse payment options to customers and ensure maximum customer satisfaction. 

Final Thoughts

So, here’s the guide on expanding your CBD business to a new market without payment issues. We have mentioned the challenges that CBD businesses usually face when it comes to payments while expanding. 

But, our blog is not limited to addressing problems – we have given the solutions as well. To make decision-making easier for you while looking for a CBD payment processor that is compliant and can seamlessly handle international payment with utmost ease and accessibility – you can check out CBD Merchant Solutions. 

It is a one-of-a-kind CBD payment processor that is especially curated for CBD businesses. To know more about CBD Merchant Solutions, why it is the best CBD payment processing, and how you can get started with it – book a free demo right away. 

So what are you waiting for? Get started right away.