Are you wondering what the steps are for setting up a POS system as a CBD merchant?
Do you want to sell CBD? Are you looking to accept credit and debit cards?
Setting up a point-of-sale system is essential for any business that wants to accept credit card payments. A good POS system will help you keep track of your inventory, sales, and customers.
For CBD merchants, ensuring your processor accepts CBD products is essential.
Luckily, based on my professional experience working at a large payment processor – I’ve created a guide that will walk you through setting up your own system for your CBD store. Plus, I’ll provide you with tips on how to stay compliant with CBD regulations.
Keep reading to get started today!
Here are the steps to set up POS system for your CBD business:
Overview of the cannabinoid (CBD) industry
The CBD industry is becoming increasingly regulated as its popularity grows. The 2018 Farm Act has done a lot to help make CBD more accessible and easier to find, as well as loosening up many regulations around hemp production and distribution.
Depending on the state, there may be varying mandates regarding the sale and distribution of CBD goods that contain a THC concentration lower than 0.3%. Therefore, for merchants looking to get into the CBD game, it’s critical to understand all relevant regulations.
This includes understanding not only what products are allowed to be sold and distributed in one’s area but also the labeling requirements and other restrictions (such as age limits) that must be adhered to when selling CBD products.
It can sometimes feel overwhelming, but keeping up with all the relevant regulations will ensure you remain on the right side of the law while selling these products.
Definition of a POS (point of sale) system
A POS system is an essential component of many businesses, both big and small. It is the primary way to process customer payments by credit card, cash, or check and send digital receipts. A POS system also stores vital sales data in its cloud-based or hard-drive memory for reference.
Inventory management processes such as tracking discounts, taxes, and fees can be handled within the same platform. Additionally, it can be used to keep track of stock levels and automate ordering processes to manage operating costs.
In short, from financial processing to inventory control, a POS system serves many functions critical for running a business efficiently and making informed decisions about future growth.
Why a POS system is vital for your CBD store
For businesses in the CBD industry, having a POS system is essential. This allows you to keep your sales and inventory data organized while providing better customer service. With a POS system, you can quickly ring up customers, apply discounts, accept different payment methods, and track and store customer information for future reference.
Having a CBD merchant account is essential if you deal with the sale, processing and transportation of CBD products. The importance of a CBD merchant account is that it allows you to securely process transactions in an efficient and compliant manner.
Through CBD merchant processing, you can efficiently manage and safeguard your customer data which is an important factor for customer trust and satisfaction.
Additionally, with in-depth reporting capabilities, an innovative POS system can provide critical insights into the operation of the business, such as sales patterns, popular items for customers, and inventory management, which all work together to increase efficiency and profitability.
When investing in the future of your CBD store, choosing the right system will have huge payoffs down the road.
Steps for Setting up a POS System for CBD Merchants
1. Research necessary regulations
It is crucial to ensure all regulations are followed before setting up a POS system as a CBD merchant. Before getting started, entrepreneurs should research local and federal laws to ensure they operate within the legal parameters set by their jurisdiction.
You need to ensure that all products sold contain the exact amount of TCH percentages stated and provide assurances that the product is safe for consumption. You also must ensure that you sell CBD products adhering to the allowable THC percentages.
That is why having a Certificate of Analysis (COA) is essential, as it provides details from an independent laboratory covering THC percentage, impurities, and other quality-related matters in the CBD product.
The COA must be issued by a proper 3rd party lab with accreditation and pass the established standards for hemp testing, such as those set by FDA regulations. As a CBD merchant, you should only purchase from a seller that provides a certificate proving the authenticity of their CBD product and its ingredients.
It’s also beneficial to periodically verify batches of products against their associated certificates to ensure they maintain their highest quality standards over time.
2. Choose and sign up with a payment processor that supports CBD stores
The first step is finding a merchant account provider that fits your needs. Unfortunately, this can be difficult because many credit card processors won’t work with CBD businesses because of legal restrictions.
You want a high-risk merchant account provider that will offer solutions tailored specifically to your industry, including payment processing solutions like eCommerce, mobile payments, and contactless payments.
Some high-risk payment processors also require the COA before allowing the processing of transactions for CBD products.
When researching payment processors, check their early termination fee, statement fees, and hidden fees. Also, check their accepted payment methods — ACH payments, credit cards, eChecks — to ensure they support the methods your business needs.
3. Choose the right system to meet your needs
The first step in setting up your system is to choose the best hardware. You’ll need the necessary equipment, such as an iPad stand, cash register, barcode scanner, thermal printer, and card reader. When choosing these items, make sure they are compatible with each other so that you don’t have any compatibility issues down the line.
Once your hardware is sorted out, it’s time to find the right software. Many different software options are available on the market today, but do your research and find one specifically designed for CBD merchants. This will ensure that your system works optimally and meets your needs as a CBD merchant. Your high-risk merchant account provider can help you with your equipment and hardware; usually, they provide the system as part of their service.
The next step is connecting your hardware and software to work harmoniously. Some POS systems require additional setup or configuration before use; if this is the case with yours, follow any instructions provided by the manufacturer or vendor carefully so that everything runs smoothly when you start using it.
4. Securely set up your system following Payment Card Industry Data Security Standards (PCI-DSS) guidelines
Setting up a Point of Sale (POS) System that meets PCI-DSS (Payment Card Industry Data Security Standard) guidelines is paramount to providing secure transactions.
- Before any hardware and software are put in place, you must ensure the system meets industry standards according to the payment processors’ policies.
- A qualified IT specialist must conduct regular reviews and updates to ensure the system is compliant.
- Servers should be securely stored in a climate-controlled environment with access restricted to authorized personnel only.
- Measurable safeguards must also be in effect for storing electronic data, including consumer credit card information, passwords, and other sensitive information.
- Keep up-to-date inventory records of components used in the POS system and apply any relevant security patches whenever possible.
- A reliable firewall should also be implemented to prevent intruders from accessing sensitive data while transmitting over public networks.
By taking these steps at the onset, businesses can have confidence their POS systems meet PCI-DSS safety standards for reliable and secure transactions.
5. Integrate with Other Platforms
One of the most significant advantages of setting up a sale system is integrating it with other platforms, such as accounting software and inventory management systems that allow you to manage your business operations.
This integration allows you to track sales numbers and update inventory levels. You will also be able to offer customer loyalty programs, as you can keep customer data all in one place.
You also need to make sure that you are using a CBD payment processing gateway. Using a gateway will allow you to process online sales.
When choosing a POS system, ensure it integrates seamlessly with these other platforms so that you don’t have any issues down the line.
6. Add your products to the POS system
Adding inventory to the POS system for a CBD merchant can be a daunting task. However, with the correct steps, it can be made simpler.
- Input all the different inventory items that are available in the POS system so that they are tracked accurately.
- Set up an item code so each customer and transaction can be documented.
- Schedule periodic checks of inventory levels
- Reorder as needed to ensure stock shelves are not running low.
You’ll also need a proper inventory tracking system to ensure you know when stock needs to be reordered and specific instructions for accurately entering updates into your POS system.
Once everything is in place, keeping your inventory up-to-date is just a matter of staying on top of product updates and maintaining consistency between each entry in your system. Adding stock to your POS system for CBD merchants can be a relatively straightforward process with some preparation.
7. Test it before launching
You should be sure to test your systems extensively before launching. This testing process involves:
- Using a test environment provided by the processor to ensure that the POS system is configured correctly. In this environment, you can check to ensure that transactions are authorized and processed reliably and securely and verify that any other functionalities work correctly.
- Using random transaction amounts to simulate real-world use scenarios for your POS system.
- Performing security verification on your systems to guarantee that customers’ financial information is protected from potential threats.
You also need to test the integration with your payment processor. To make this process simpler and more efficient, you should take advantage of a test environment provided by processors to simulate actual transactions while debugging any issues or reducing bottlenecks in the checkout process before going live.
I designed and set up similar test environments when I worked at a payment processor.
These environments work in conjunction with the credit card test environments, so the transaction is processed as if it is in the real world. But it doesn’t affect your “real” bank or funds.
By using a simulator or other processor test environment, you can gain confidence in your technology infrastructure before going live.
With thorough pre-testing of the entire system, you can be sure that your POS system is up to scratch when launching.
As a result, customers will experience faster and smoother payments when they return to shop.
8. Train staff on how to use the POS system correctly
Be sure to train your staff on using the system, to ensure that they can handle customer transactions and questions when they arise.
Common challenges and solutions when setting up a POS system as a CBD merchant
- Difficulty obtaining a merchant account due to CBD’s legal status
- Complexity of integrating the POS system with your business systems
- Ensuring smooth and efficient transactions at the point of sale
- Consider your specific business needs and budget
- Look for a system with strong security and compliance measures
- Choose a system with good customer support and training resources
Alternatives to Using a POS System
Without a system that will allow you to accept payments, you will only be able to accept cash or checks. You can work with your payment processor to accept online payments, such as eChecks and ACH, through an online portal or app (think Venmo, Zelle, or PayPal). But again, you need to ensure you can get a high-risk merchant account with your payment processor.
By following the steps outlined here, based on my experience with digital payments, you will be able to find a payment processor that supports cannabidiol products and set up your POS system. By using one of these CBD merchant accounts, you will be able to start processing payments for your CBD store.