Cannabis dispensaries, Walmart push pay-by-bank boundaries

Account-to-account payments, also known as pay-by-bank, is set to take off in the United States, and cannabis dispensaries may be the launching pad. CanPay, a payment network designed for cannabis retailers and consumers, just announced it has received approval from the State of Utah's Division of Finance to provide payment acceptance services to pharmacies selling medical marijuana statewide.

The CanPay platform enables consumer payments from more than 14,000 financial institutions and can be used by traditional retailers as well as those in emerging markets and businesses in highly regulated industries, like cannabis. Currently, the company is said to serve more than 325,000 consumers at 1,150 cannabis dispensaries across the United States.

CanPay uses the ACH to initiate debits from consumer checking accounts for deposit to compliant merchant bank accounts at financial institutions that participate in the CanPay network.

"Approval by the state of Utah is further evidence of CanPay's focus on compliance and due diligence when it comes to enabling payments on our platform," said Dustin Eide, the company's CEO.

CanPay is accepted by 10 of the top 13 public cannabis companies operating in multiple states.

ACH as first step in journey

The ACH has emerged as a go-to strategy for pay-by-bank initiatives. Last year, Mastercard and JPMorgan Chase began piloting a pay-by-bank initiative using an ACH open banking technology developed by Mastercard.

Meanwhile, Walmart is partnering with Fiserv on a pay-by-bank offering. Initially, the payments will process through the ACH, but beginning next year, Fiserv said, it plans to route pay-by-bank transactions over its NOW network which is linked to both FedNow and RTP.

NOW is a payment network that Fiserv launched in 2014 to support non-POS transactions, including bill payments, P2P and account-to-account transfers on a single platform.

Visa has said it plans to launch a bank-to-bank payment service in Europe beginning next year, according to reporting by CNBC. The service will allow users to set up direct debits on merchants' ecommerce sites.

In a report published earlier this year, Visa claimed that "almost everyone has paid [a business] with their bank account at some point." Bill payment is perhaps the most common, generating more than $10 trillion of ACH volume a year, Visa wrote, citing Nacha data.

Among consumers Visa surveyed in September 2023, about a quarter said they always prefer to pay from their bank accounts when making online purchases.

Merchants like bank-to-bank payments because they can cost significantly less than credit and debit card payments to process. The average ACH transfer costs between 25 cents and 50 cents, although the cost can be upwards of $5 for same-day transactions, according to various estimates. An RTP transaction can cost between 25 cents and $1. The Fed charges banks 4.5 cents for each payment cleared through the FedNow network. The fees banks in turn assess customers vary.

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

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