How Does Cashless Payment System in Cannabis Business Work?

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How Does Cashless Payment System in Cannabis Business Work?

The legalization of recreational and medical marijuana in Canada has changed the industry in a big way; this has also changed the perception of many people regarding the effects and benefits of this wonder plant. However, in the US, recreational marijuana is still illegal, as well as the distribution of it. Regardless of this, the cannabis industry is still growing exponentially. A lot of business people are already joining the community by building up their own dispensaries and manufacturing plants. But the most noted difficulty that these cannabis business owners is how to make their cashless payment work. This article will discuss all you need to know about cannabis cashless payment systems.

Introduction to Cashless Payments for Cannabis

Although the cannabis business is highly profitable and fast-growing, not all of the business experience milk and honey all the time, the cannabis companies still experience surprising challenges, one of them is that banks do not want to be involved with any cannabis-related businesses. According to these banks, cannabis businesses are considered high-risk establishments.

Since the bank does not cooperate with the cannabis business, the establishments cannot open their own merchant accounts so that they can process credit card payments.

However, due to the technological advancements that we are now experiencing, payments are made easy as ever. There are cashless ATMs already that were produced for cannabis companies so that they will have the ability to accept cards for purchases instead of the conventional cash. Face it; only a few people use cash for their payments anymore.

Cashless ATMs for Legal Marijuana

In this section, the definition uses, and advantages of cashless ATMs will be provided. 

Cashless ATMs are far different from the traditional ATM machines where you insert your card, select the amount, and it will spew out money, which you commonly encounter almost anywhere. Cashless ATMs are risk-free technology, which is commonly known as POB systems (point of banking). These are not specifically developed for cannabis business use only; these are also used for other high-risk businesses such as strip clubs and hair salons.

The most widely known difference between the two is that cashless ATMs only process debit card transactions; credit cards, however, will not work.

The interface of these cashless ATMs are similar to what you usually see; you may swipe the card and type in the PIN. It has the same authorization process that banks implement.

Once your transaction has been verified, the machine will not provide any cash, but it will provide a voucher, which is widely known as “scrip”. That voucher will be proof that cash has been transferred from the customer’s account to the specific merchant where they will purchase a product or a service.

Once the voucher or voucher code has been given by the ATM, you may now use it as a currency to purchase the item or service that you wish. The funds are transferred to the merchant’s bank account and will show up in the customers’ transaction history as a withdrawal instead of a payment.

However, not all of the cannabis business has this technology yet, which is why the vouchers can only be used at establishments which carry the cashless ATM technology. Since the transactions are being paid by vouchers, the change for transactions that do not have an exact amount is in forms of cash instead.

There is a payment agreement for cannabis businesses in order to carry out this technology; a few of them are “pay per swipe”, “percentage-based,” or “pay per swipe + percentage per transaction” fees. The merchants do not have the option of annual subscription fees.

Having these types of technologies has helped many businesses, as well as cannabis firms, in establishing their business in the online setting.

Pros and Cons of Cashless ATMs

The most notable benefactors for these cashless ATMs are the brick and mortar stores or simply known as physical stores, whether for medical and recreational cannabis. Since the introduction of this technology, a cash-based store is now defined as a Jurassic store.

The common advantages of cashless ATMs are the following.

  • A business is safer and secure due to the absence of large amounts of cash that goes in and out of business.
  • Cashless ATMs are optimized to save space; they can be placed on the counter or even in a makeshift stand. It is also easy to maintain and easy to use.
  • It is cost-effective than merchant account bank fees for credit card transactions.
  • The Cashless ATM system can be used by any business with a physical store. The only thing that customers will use is their ATM card and a PIN code. 
  • The use of the card transaction lessens or may eliminate the threat of fraud and chargebacks. 
  • The use of these technologies will definitely reduce the costs of the business because the convenience fee is being charged to the customer instead of the business. This can reduce the operating expense and will allow the business to increase profits. 

The negative side of having these technologies are the following:

  • Some customers express concerns and complaints regarding double charging. This sometimes happens in the form of being charged with a convenience fee and a transaction fee from their banks. 
  • As mentioned earlier, since the transaction is defined as a withdrawal and not a purchase, the bank has a hard time trace the translation, especially if the business has been intentionally hiding the nature of the business.
  • Some businesses are not too open to technology. They defined the technology as a way for companies to suck the life out of them by charging “per swipe fees” instead of getting the full amount when the product is paid in cash.


The payment processing solutions for cannabis businesses are already out there, it might be a solution for some cannabis businesses, or it might not. But it is a good way to improve your cannabis transactions in the near future.

To ensure that you are getting the best out of your hard-earned money, select a reputable company that will provide the best solution for you.

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