Sign Oregon Banking Memorandum Of Understanding Myself

Industry sign banking oregon memorandum of understanding myself

hello welcome back to the oregon hemp convention digital summit coming to you live from seattle washington this is our day three uh so impressed with all the speakers we've had so far hopefully you've been having a great time uh coming up next we've got a panel on merchant services finding the right provider and also protecting the status of your merchant services so you can continue to do business this panel is so graciously sponsored by cbd payment pros providing the best in class payment processing services to merchants for a variety of products such as cbd cbg hemp flour or hemp seeds for more information on how they can help you navigate the world of cannabinoid payments please visit cbdpaymentpros.com [Music] all right love to introduce our panels today make sure that you're headed in the right direction we've got mark garfinkel who is a managing partner of cbd payment pros and international payments we also have david j bartone of barton law offices good morning gentlemen good morning depending on where you're located yeah good good afternoon you know this is a really important topic yeah all of us who work in the cbd and hemp space especially if you've been here for more than more than two or three years you know that it's been difficult to find even a bank account let alone merchant services can you give us a little bit of background on you know what is the legality of hemp products in the eyes of the financial services well i guess i should start out uh just introduce myself i'm dave barton i've been representing clients for about 25 years in the merchant services industry and to answer the question uh the most important uh law that was passed over the course of the last two years is the 2018 farm bill of course and then uh you also have the laws of fba the fbc that have a yeah the 2018 farm bill has been the big litmus we saw a couple of merchant service providers dipping their toes into the industry there's a lot of things that you have to to keep your eye on i know that we're looking at total thc delta nine compliance uh you know can you give us some an idea of like how are some of the guidance coming through you know we've got epidolex which came through as a medicine clearly that that's made it through the financial sector mark can you give us my idea of what it what does it take to get approved and what kind of president has been set yeah exactly i mean the last couple of years prior to last fall obviously in the arena of merchant services has for lack of a better phrase it's been a real [ __ ] show right merchants have had a really really tough time finding consistent and steady uh processing even when elevon a big boy came along and tried to jump in the game they didn't really know what they were doing since that time i think that bank providers since the passage of the farm bill have felt a little bit more uh safe and secure and trying to venture out into that area but what a lot of merchants and a lot of participants in the industry don't understand that that's not necessarily the all is clear sign 100 there's still a lot of extra protections and precautions that the banks are taking in underwriting and covering their assets so to speak that they don't necessarily have to do when they underwrite other types of merchant services business um but uh in terms of uh as just a quick follow-on to that in terms of securing securing a merchant services obviously you know when when you're looking at what are the key factors the key decision making points for merchant out there you're going to be looking at oh you know what's the love for that provider how many merchants have they have they bought over the last three six 12 months what are the banks that they represent how many solutions do they have how many arrows do they have in the quiver so to speak of banks that they can utilize to get you a merchant account how's the support and services that that team has to be able to offer the merchant what kind of kind of assistance can that provider give you and guidance with respect to putting together a compliant website and provide proper guidance with respect to the marketing language that goes on that website so those are some of the key factors that merchant that the merchants need to consider uh in looking for a provider yeah mark i'd love to jump into that a little bit more you know when you're working with the bank uh it can be a lot of scrutiny uh to get through the hoops they'll look at your website they'll look at the name of your business they'll look at your own personal history when it comes to applications you've submitted or been rejected for can you give us some some baselines on when we're establishing our businesses our websites you know how do we protect our ability to secure merchant services and ensure that they're durable through time yeah absolutely um well you know first off you want to make sure that your merchant service provider or the bank that you're selecting has a history has a decent history of the business as they're committed to the business and they're openly accepting and underwriting cbd product that's first and foremost that gives you a leg up right then and there you're being underwritten as a cbd merchant as opposed to a couple of years ago maybe you weren't maybe you were being miscoded or misclassified by a provider or using a solution that was trying to get around things i guess the second way uh that you would do that with respect to an online or e-commerce right there's going to be difference between e-commerce and retail there always is there's always a difference between card present merchants at the retail storefront and e-commerce e-commerce always carries a higher level a higher degree of risk because the level of fraud associated with e-commerce is much higher than at retail so you need to understand what are the potential areas and avenues of fraud and how do you avoid uh fraudsters from using stolen cards on your website or calling you and maybe placing a uh placing a a wholesale order right we have we've had three merchants this year that have been through the uh uh have been the victim of a fraud scam and so merchants need to be wary of that because they'll lose their account for not for really no fault of their own outside of being blindsided uh so those are a couple of the avenues as and then the last would be making sure that they do things by the book right um it when you put together your website you get the guidance and you you have the right language on your site that's uh that's not uh the right marketing language which is very important that is acceptable to the fda once you get that don't change it right and don't add products without letting your merchant service provider know that you're adding products so those are the basic abcs of really how to maintain that account what are the biggest red flags that tip off a merchant service provider that you know maybe they don't want to do business with the company you know we feel that the hemp in you know cannabis space as well as a pretty big business opportunity for financial services but you know in some ways you know a billion dollars of here and there is not much compared to you know the gdp of the united states and what's transacted what are the most common mistakes made by companies that you know they end up losing their ability to process credit cards i'd like to address that yes thank you um i think one of the most important things needs to be taken into consideration that merchants have to be aware of is not making any kind of health claims uh insofar as how it is that cbd products uh can you know help a consumer i think the fda has really come down hard on a lot of the um merchants in fact they've issued 15 warning letters uh this past year i think there's a total of 18 over the last nine months uh in which they have shut merchants down and uh you know put them under an injunction uh and a consent decree because they're making claims that there are various kinds of disease cancer uh one should avoid making claims for example that uh cbd can help prevent anxiety or alzheimer's uh cancer etc so to the extent that uh health claims are being made uh i think you're gonna have a problem uh and you won't be able to maintain the longevity of the merchant account um that's that's one of the biggest areas i think that everyone should wear out try to avoid any kind of a health day whatsoever also uh you know there's even a lot of warning letters that have been sent out to companies that have been making claims about what cbd for animals you know for example i have a dog that oftentimes gets hot spots so if a merchant is selling a cbd product for an animal that could be an issue uh representing on the website that you can prevent hot spots but there's all different kinds of things you know the uh cbd has not necessarily been recognized as being generally recognized as safe uh graphs i guess we could work with that's the acronym um but i think that uh you know it has been cleared uh not necessarily uh pose any sort of significant uh health detriments either so i think as there's further testing that's done i think we're going to be uh you know opening up the laws uh so far state and federal laws because you're dealing with both unfortunately the 2018 farm bill did remove uh cbd uh and hemp from uh you know it's listing as a schedule one uh narcotic by the bea under the association um there was some issue over whether or not uh you know some classification code that had been issued prior to that uh made it uh illegal uh under the 14th farm though i happened to be a believer that under even under the 14th floor bill a cbd or hemp was legal this is a slide we have and uh we have uh i'm sorry we're gonna talk about the slider okay so you know you have the before the 18th farm bill and i you know that's history what's more important is what comes after the 8 18 farm bill you know again as long as the uh cbd product is three percent point three percent or less uh thc is considered to be compliant um and again you're looking at this particular slide uh any kind of health claims related uh to relationship okay there we go um and so what what the 18 farm bill did is it happened its derivatives from the definition of marijuana as long as it's 0.3 php or less uh it did uh voiced upon the fda a lot of responsibility to regulate uh how it is that it's being marketed and what sort of things that are being made that's what the the 15 warning letters have sent out you know over the course of the last six months addressed um and you know of course you also have the state laws as well that impact uh the federal law um and again i think a lot of people may not be uh necessarily you know knowledgeable that it did not legalize marijuana um but you know more emphasis now is being made about the fda's authority oversight over you know the cannabis rivers so uh it's very important that uh you know again no health claims be made um and avoid any kind of uh reference to uh cbd uh curing any sort of health diseases uh there's the sort of stock um language that normally would go on most bottles of nutraceuticals that it's not approved by the fda to you know diagnose or cure a disease and with respect to those claims it's not only making them expressly it's also making them implied i personally believe that marketing i can go what not much marketing really has to uh you know be done in connection with the sale of cb i think it pretty much sells itself so you know as long as it's not making a health claim and you're not saying it's going to curb cancer or glaucoma or any of the other diseases i think that would be you know very helpful and it would help you get approved and to continue to maintain your merchant so i'd like to follow up on that you know we're talking about the rules and regulations we're all waiting on more guidance from the fda you know is this a nutraceutical is it a supplement how is it going to be controlled what is what is grass going to look like and what is the enforcement going to look like as well i imagine that there's going to be some volatility in the merchant service industry uh mark do you have any insights on what we should be expecting once there's more clarity in these rules right i think the big you know you hit the nail on the head in your introduction with respect to the approval of epidialex it it really kind of guided everything as it with respect to the fda because epidiolex basically turned cbd as a drug for the for the treatment of epilepsy and so what is going to have to happen is that the fda is going to have to have some kind of carve out uh for cbd i mean in effect i mean cbd is a is a natural supplement right it's you know like any other natural herbal supplement that is sold in an apothecary uh herbal apothecary or natural remedies store but the the the epidialex approval really changed the name of the game in that regard so in terms of what's going to happen and when it's going to happen i don't know but there has to be some type of change there that enables because the way that the way that the laws are currently written the way that fda fda views this epidemics as a drug i mean basically anything any edibles that are sold now accepting edibles anyway okay as long as they're less than 0.3 but technically by the letter of the law edibles are illegal to sell it's legal to introduce a a drug into a food as a supplement into a food that is uh ingested and that applies to both humans and animals so well a lot of people don't realize is that the banks are actually taking a big risk here there's something illegal usually visa doesn't a lot visa mastercard don't allow the processing of illegal um activities now do i agree with it that it's illegal no i'm in the camp of everybody else i'm in agreement that the thc level thing is arbitrary and wrong i think that there has to be some relaxations that will with the fda and some of these other areas there's merchant services to open up a little bit broader wider and um and to be more sustainable and comfortable for other banks to enter the playing field so um i've got a question as far as strategy and tactics goes you know at coach we always try and have at least one merchant service provider and backup because sometimes things happen unexpected things well do you recommend that people have a backup plan for their merchant service provider absolutely i mean that's kind of like the uh uh that that's that's the number one thing that we thought that we teach educate our customers on is you really need to have uh you either need to have a provider that has multiple solutions so that if something happens you can you can move now if you have a large enough volume to support the the the base fees that a lot of these accounts have then you go ahead and have two or three different merchant services accounts in place and you spread your volume out so you're not you're not caught off guard in that regard i think a lot a big mistake that a lot of merchants are making out there is hanging their hat on square square is they're not a they're not a merchant services provider they're not providing multiple solutions they provide horrible customer service they're not responsive to the needs of their customers and they will turn you off on a dime if visa starts breathing down their neck they have one sponsor bank behind them chase bank if chase bank wants to you know say hey we better pull the plug because they're getting heat from the fda and visa then then they'll do it and you're just left holding the bag you got no processing so uh you know i would encourage all merchants out there with square to look for another provider or two as long as you can afford to do so yeah and of course go ahead so as you can see it's a follow-up to that unfortunately when a lot of merchants get shut down and they are also placed on the uh match list which can be a real problem uh that means that uh they try to apply for a merchant account and someone else could they'll run a match report on them and then show probably a match reason code five ten or thirteen that's transactions violation standards so you get on the match list it's really hard to get off so that's one of the things that should be avoided i know a lot f uh merchants are also looking for additional ways of being able to accept electronic payments including uh you know ach type transfers electronic checks etc yeah you want to stay up the match list yeah david we were talking about this a while ago you know i i may have lost my merchant services account once or twice or probably probably more like six ten two dozen times uh you know getting off the match list seems really difficult if you were bumped off of square they're never going to help you you can't get through the phone lines is if working with a company like like you guys are you able to get somebody off of the match list well you know it is difficult under the match rules you have to show that there was some sort of an error that was made by acquirer and you also have to take a look at the reasons uh when you're on the match list technically we'll say that you're on there for a five-year period although there have been instances which is prior to a five-year period but uh that's a big problem and uh yes merchants can be removed from the match i think a lot of the people in the on the floor who are handling the customer service or people in risk will give the stock answer that once you're on there it can't be taken off um unfortunately a lot of people don't know much about what the match is uh they're not uh familiar with any of the roles associated with that reason codes and so uh i have a lot of people calling me telling you they never even heard of what the match list was uh so uh it's a difficult task but you have to prove that there was an error and then the question is how would one even know if they were placed on the list you just get an instant denial or would they tell you well normally how uh merchants find out is that once they get terminated they plywood someone else match report is run and then the match report comes back they're told that their application is being declined because they're on the match list they say or we go talk to the acquirer that puts you on the match but oftentimes they're not sure who put them on the match so normally if i'm representing the client i would write the mastercard and ask the people of mastercard uh whether or not my client's on the match uh if uh he or she is on the match who put them on there and why and uh then you normally would go to the acquirer and deal with that uh but you know again some of the stock responses by people with customer services that once you're on the match there's nothing that's not true well that's good to know for a lot of us out here um you know and yeah people are go ahead go ahead mark and i will add real quickly michael i i will add that um you know that's another reason to have multiple accounts because you know if you are if if if you are on the match list or um you know you i know i know you can't go and get another account so if you have the ability to get another account uh you go ahead and do it now because if something happens you know typically if you already have an account and then you get put on match they can go back and do a retroactive match and say okay we're going to terminate your account but usually in this space they're not particular they're a little bit more the providers are a little bit more sympathetic to cbd merchants they know that they've been through the ringer as long as it's not because of things like excessive chargebacks or or other fraudulent activities right or misrep were misrepresenting their own uh who they were right now if it's the merchant service provider that that misrepresented the merchant they can you know through emails they can uh the uh the merchant can prove that right so i've got a two more questions there's a two-part question mark it has to do with the nitty-gritty of choosing a merchant service provider and the roi can you talk a bit about the rates you should expect between an iso like square and working with someone like yourself with the economy we're constantly looking at interest rates do you expect to see any changes in those rates and the last piece to that is often when you are signing up for merchant service provider they have you get one of those virtu terminal and pay the 50 a month fee and that's that's how they make it if you can give some advice for folks who are signing up as well on those terms yeah sure so first off interest rates really don't have anything to do with discount rates that are charged for merchant services the base rate of merchant merchant services raids are what are called the card bank card brand fees of visa and mastercard and these are the interchange rates what are called interchange rates that are charged to the sponsor banks that's the foundation of rates and then things get marked up from there the uh if you are being charged a monthly fee if you're a retail store you're being charged a monthly fee for a terminal uh don't do it right just buy your terminal uh and uh you know if somebody's trying to sell you a lease on a terminal um i i you know the merchant service providers are always looking for an angle right some are more ethical than others you know we try to be at the top of the list when it comes to straightforward honesty and high ethics and we always want to do everything that we can to be up front with our merchant so if we're talking about a terminal we're really not trying to make money on the terminal uh that's a one-time sale right the terminal the the merchant services account can last for three five ten years and that's where you know that's where we make the money by keeping a customer happy for the long term now when it comes to other fees that are being charged i think merchants tend to put too high a priority on the fees being charged and not some of the other things that i mentioned at the start of the discussion of the panel discussion fees are important but they're kind of like you know number three four or five down the list of important items when selecting a merchant service provider after all if somebody's going to get your rate of 4 versus 4.25 how much does that 0.25 really impact you as a merchant when you're looking at 100 margin or starting with 100 margin right and that where else can you get savings of 0.25 in running your business right it's not that it's not the end of the world now in terms of square square's charging rates anywhere from 3.8 to 4.8 percent depending on whether it's retail e-commerce or uh keyed in what's called moto transaction where you're keying it into a virtual terminal um and our rates are around that same thing and we tend to charge what we believe are kind of market rates and so wheelchair our base rates are anywhere around 3.9 to 4.9 percent depending on whether your startup what types of products you sell and that kind of thing but we always are looking out for how do we get our rates lower if a merchant is ex if we're seeing competition if the world is changing and more banks are entering um you know we we can see lower rates now i mean we know people that are on square retail they're getting charged 2.8 well can we you know you know we'll do what we can to meet the rates out there but by the same token there's five banks in the country that are openly accepting cbd and underwriting cbd that's not a lot of banks so it's kind of a supply demand economics thing in terms of when do rates come down rates come down when you start to get broader acceptance by other banks in the marketplace and it becomes easier and less risky for banks to accept and under perfect well thank you so much for for all the clarity and merchant services you know a couple of things that i take away from this have a backup provider and make sure that your merchant service provider is stable goodness knows you want to make sure that you can run those credit cards and keep your business going mark david thank you so much for joining us today for the digital summit and what's the best way for me to get a hold of you mark mark uh oh absolutely mark.garfinkel at intl dash payments.com i'm always available on my cell phone for everybody 404-944-1823 all right you guys enjoy and we'll see you soon for the next panel okay thank you thank you mike