Service Not Allowed: The Decline of Pin Debit
Last week many consumers dealt with the frustration of not being able to process transactions at dispensaries using a debit card. Due to the inconsistent regulations that vary state by state, this has caused some major impacts to everyone involved. As someone who both works at a dispensary, Grasshopper Club Chicago, and purchases weekly I experienced the frustration of pin debit going down in the United States firsthand.
For those who may not know exactly what this means let me define “Pin Debit” for you. These transactions involve direct withdrawals from customers' bank accounts and are subject to stricter regulations and compliance requirements. This can make it even more difficult for dispensaries to find payment processors willing to handle pin debit transactions for cannabis sales.
Since dispensary transactions still remain illegal on the federal level, pin debit was merely a workaround. Regulations, such as those governed by the Bank Secrecy Act and anti-money laundering laws, can make it challenging for dispensaries to access traditional financial services, including debit card processing. Banks and financial institutions are often hesitant to engage with cannabis-related businesses due to the risk of federal intervention.
The lack of payment options has had direct implications for operators and their dispensary. The inability to accept pin debit payments can be a significant inconvenience which has led to handling mostly cash. Cash transactions come with security concerns, logistical challenges, and extra costs associated with handling large amounts. Moreover, it limits the customer experience and can deter potential buyers.
This has also caused confusion for consumers, especially those who have become accustomed to using their debit card when making cannabis purchases. Many of them have resorted to carrying cash or using the in-store ATM which causes additional security concerns and could limit the amount of products they decide to buy.
So what other options do we have you may be asking? There are some operators who use “Cashless ATM” where the amount of the transaction is rounded up to a whole number and resembles a typical ATM withdrawal (at least to the bank). There’s also “ACH” which probably is the most stable solution for operators today and one I would highly recommend for a number of reasons. ACH is a network that facilitates electronic bank-to-bank transfers, making it a common method for electronic funds transfers and payments. Some vendors offer ACH payment processing solutions to help cannabis businesses manage transactions, including payroll and vendor payments.
Here are a few benefits for dispensaries and consumers when using ACH:
Less reliance on cash
Efficiency
Improved record keeping
Vendor payments
Customer convenience
One provider who is a leader in this space is Aeropay. Aeropay is a fintech company that specializes in offering payment solutions for the cannabis industry, including dispensaries and related businesses. Their focus is on providing secure and compliant payment processing services to address the unique needs and challenges of the cannabis sector. Some of their key features include ACH Payments, Compliance, POS Integration, and Analytics. Please note that the specific features and offerings of Aeropay may evolve over time, so it's essential to visit their official website or contact them directly to get the most up-to-date information on their services and how they can benefit your specific dispensary needs.
With the recent news of the SAFER Banking Act making progress in Congress and the administration’s decision to adjust the scheduling of cannabis, where are on the verge of major change. Let’s continue to support this change by educating ourselves and staying up-to-date with the latest developments in the industry.
I want to emphasize that the information provided in my responses is not influenced by any sponsorship or promotional arrangements. Readers should always conduct their own research and due diligence before making any business decisions or choosing service providers.
