The Digital Revolution In Cannabis Banking – Are You Ready?

As marijuana-related business owners await the passage of SAFER, they require alternative banking solutions. Fintechs have emerged to fill this void, from closed-loop payments systems to automated compliance platforms.

Sprout Processing provides cannabis businesses with a digital payment option that enables consumers to make purchases quickly online, in-store or via delivery with just one tap. Furthermore, its software automates compliance monitoring and reporting procedures in order to increase efficiency while upholding regulatory adherence.

1. Closed-Loop Payment Systems

Cannabis businesses looking for solutions that help meet compliance, payment processing and operational transparency requirements have turned to FinTech solutions in response to restrictive banking laws and limited traditional bank services. These innovative approaches offer customizable strategies for compliance, payment processing and operational transparency with their effectiveness dependent on regulatory changes, stakeholder collaboration and continued technological innovations.

Closed-loop payments are an increasingly prevalent phenomenon. Consider traditional gift cards where consumers add value to a card they can only use at specific retailers, or mobile apps like Venmo and PayPal that enable users to link their bank accounts and transfer money among each other directly.

Closed-loop digital payments systems for cannabis dispensaries allow customers to make transactions using debit cards linked directly to their personal bank accounts at your dispensary, enabling customers to spend up to 30% more than using cash alone and creating an effortless customer experience. Aeropay offers one such compliant bank-to-bank digital payments solution;

2. Mobile Payment Apps

Cannabis retail success depends on a range of factors, one being offering consumers fast and straightforward payments. As such, closed-loop payment systems and prepaid cards have become increasingly popular as they enable customers to bypass ATMs at point of sale to make payments directly at sale point.

Fintech companies have recognized an opportunity to address this need by providing solutions tailored specifically for the cannabis industry’s banking challenges, including providing tailored banking infrastructures and compliance frameworks.

Aeropay, for example, provides cannabis-compliant bank-to-bank digital payments using an ACH process. Businesses using it can connect directly with customers’ bank accounts rather than going through card networks or using checks, wire transfers or cash. Setup is fast and requires minimal data input – making it simple and fast for dispensaries to onboard new users while adhering to all ACH network regulations for safe funds transfer.

3. Automated Compliance

Cannabis remains a high-risk industry for financial institutions. To effectively work with this sector, banks must create and implement an extensive compliance program encompassing onboarding processes as well as ongoing monitoring and enforcement of state laws and regulations.

Enhance due diligence is another cornerstone of compliant cannabis banking, as the industry’s high-risk status necessitates an increase in regulatory filing and reporting requirements. Confia is here to help institutions meet this obligation while assuring customers are compliant with state regulations.

One financial institution which automated their cannabis banking program experienced significant time savings on compliance tasks, process improvements, and meeting examiner expectations. Leveraging Metrc as the industry ecommerce platform enabled them to streamline their work while expanding their program; now managing over 120 CRBs with ease and enjoying overall higher levels of compliance.

4. Cryptocurrency

With cannabis now legal in many US states and an anticipated global market of $20 billion projected, its industry relies heavily on access to secure, robust and straightforward financial services. Unfortunately, due to cannabis remaining a Schedule 1 drug at the federal level, banks remain reluctant to provide these essential tools, leaving many operators and customers solely dependent on cash payments for operations and transactions.

Cryptocurrency and its underlying blockchain technology offer an effective solution. Companies like Tradeshift allow the creation of security tokens which customers can purchase to pay for cannabis products. Coupled with an in-loop payment system, these digital tokens provide both businesses and consumers with a safe, discreet means of conducting transactions while creating legally transparent records that help ensure legal transparency. Transaction fees are lower; unlike credit card processing, settlement occurs almost instantaneously.


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