Page 23 - GS250102

r
o
y
St
Co
v
er
ChapterTitle
But CanPay appears to be the exception among providers ISOs and agents looking to board CBD merchants face sim-
of bank-to-bank payments. Ron Herman, founder and CEO ilar obstacles. Dustin Magaziner, a partner at PayBright, a
of Sionic, an Atlanta-based company that built a bank-to- Raleigh, N.C.-based ISO, said on a recent Merchant Sales
bank payment solution, has been working with Jack Hen- Podcast that he's been boarding CBD merchants, but it's
ry & Associates to support bank-to-bank payments using not been easy lining up sponsor banks.
The Clearing House's RTP network and FedNow, which is
operated by the Federal Reserve. Neither network would "A big part of it is the sponsor bank and what they're
be open to moving transactions tied to cannabis business- comfortable with," Magaziner said, noting that many
es due to the regulatory risks tied to federal laws, Herman aren't comfortable underwriting high risk businesses, and
said. smoke shops and CBD businesses are among those consid-
ered most high risk.
Sionic was working with Toronto-based Canadadac to
provide payment systems for cannabis businesses, but it "It's not just about getting an approval upfront, but what
hit the pause button on that. Herman insisted that Sionic happens later on if and when there's a bank audit," Maga-
will stay clear of the cannabis market absent federal legal- ziner added.
ization. "Pay-by-bank won't be an option until that occurs,"
he said. "We've all seen instances where the processor approves
a merchant, and the sponsor bank comes along and they
Boarding CBD shops also a headache don't like what they see, and they shut it down."
It's really all about risk. Banks, as a rule, are risk averse.
Some smaller banks and credit unions that are higher risk Patti Murphy, self-described payments maven of the fourth estate, is
takers, if marijuana is decriminalized, may jump into the senior editor at the Green Sheet. She also co-hosts the Merchant Sales
market, Herman suggested. "But that's a level of risk Sionic Podcast, and is president of ProScribes Ink.
is not willing to take on."

23