One of the most contentious and popular ways to pay for cannabis is a cashless ATM. Unfortunately, these aren't your standard ATMs. Instead, the checkout counter at the dispensary employs what appears to be a typical card terminal. Although the initial payment process looks like a regular debit card transaction, it is not how things work.
Even before dispensaries entered the picture, these machines served as a cover for illegal trade. In addition, ATMs that do not accept cash violate network standards and federal banking legislation, and they occasionally require a change from dispensaries for specific transactions. Ultimately, cashless ATMs have spread among dispensaries as a solution, but is it worthwhile?
What harm do cashless ATMs cause to marijuana dispensaries?
A dispensary breaks US Codes 18 and 1956: Laundering of Currency Instruments if it employs a cashless ATM. Most people associate "money laundering" with illicit activities, although cashless ATM fees can be categorized similarly. Customer transactions are hidden when a debit card is used for a cashless ATM charge at the register. The Visa and Mastercard conditions of use are severely violated when attempts are made to conceal transactions, and there is a possibility of daily fines ranging from $2,500 to $200,000. In addition, sanctions may be imposed on dispensaries starting from the first day of noncompliance!
Retailers occasionally pass off cannabis purchases as debits. Customers must pay a convenience fee, like at an ATM, and they can round the transaction to the nearest $10. The merchant may receive commissions from this shady method of payment.
Cashless ATMs are used by companies that are fronts for illegal activities to conceal their training, and local governments have begun cracking down on dispensaries. For example, there was a widespread shutdown of hundreds of cashless ATMs in Colorado. Similar issues led to the closure of multiple dispensaries in San Francisco with only a 48-hour notice.
The continuation of cashless ATM fees could lead to the downfall or closure of numerous cannabis businesses. Although there are advantages to using a cashless ATM at your dispensary's checkout, clients should be aware that it is an unreliable and risky payment method. That represents a significant barrier for licensed dispensaries trying to adopt safe and legal payment acceptance practices. In addition, cashless ATM payments do not support online transactions, and dispensaries cannot accept Apple Pay.
Will ATMs disappear in the United States?
Is it likely that the US will one day be a cashless society? Customers may no longer require cash-dispensing ATMs because digital payments, wire transfers, and smartphone wallets are increasingly accepted as standard payment methods. ATMs will continue to operate while there is still cash available. Dispensaries that accept Apple Pay and credit cards could eventually appear. As the legal cannabis market is still developing, keep an eye out for what might be in store.
What actions must dispensaries take to receive payments?
Consider how useful an app like Venmo or Cash App would be for legal cannabis. Many businesses would want to be the following central cannabis API. With Sprout Processing, we have a e-commerce, contactless, mobile react SDK and open API so dispensaries can start considering fully compliant credit and debit, such as Sprout Processing. For specialist businesses like cannabis, Sprout Processing offers digital payment systems with multiple layers of security and compliance. Customers can pay at the dispensary by either having the dispensaries’ budtender process the payment, or have the customer pay from their own phone. Our solution allows for cannabis dispensaries to accept Apple Pay, Google Pay, Samsung Pay, or even scan the customer’s card.
Avoiding additional card costs related to cashless ATMs will be made possible by using fully compliant credit and debit card processing built specifically for the cannabis industry. We even have based contactless payment options. Dispensaries can accept payments online with Sprout Processing and customers can pay with their credit and debit cards.
