Article by Debra Borchardt, Forbes
You can buy pot legally in several states now, but using a debit card to pay has been a dicey proposition.
Now CanPay says that it has created the first debit payment solution for cannabis shoppers in Washington, Oregon and Colorado. MasterCard and Visahave made it clear they have no interest in working with marijuana retail businesses until federal law changes and this has created an opportunity for emerging financial companies.
Americans take it for granted that they can use their debit cards anywhere, but that isn’t the case when making purchases at a dispensary. Some dispensaries provide on-site ATM machines so that customers can pull out money from their bank accounts to make a purchase. The problem is that these machines tend to charge fees of nearly $5.
While CanPay says it’s the first real debit card solution, many dispensaries say they already accept credit cards and debit cards. “Likely they are using some type of Visa or MasterCard solution, which is not endorsed by Visa or MasterCard,” said CanPay Chief Executive Officer Dustin Eide. “Some dispensaries seem to have set up debit card transactions, but they either misled the banks as to the nature of the business or certain companies have discovered creative ways to obtain a merchant account for the dispensaries. Often the result is that once the bank discovers what is happening they close down the account.”
Not only do Visa and MasterCard reject cannabis customers, but so does Apple and Google. Neither would allow CanPay to put their payment app in their mobile stores. CanPay had to create a separate website in order to set up the app. Eide says its system is actually more secure than a credit card or debit card.
The customer pays for their dispensary transaction by accessing the cite on their mobile phone. Then CanPay generates a single use token or a QR code. This is presented to the retailer for payment, who pays the transaction fee. It’s great for the customer who may tire of paying high fees for the on-site ATM or is reluctant to make an extra trip to their own bank.