Do Cashless ATMS Help Pot Sales?
One option for legal dispensaries is the cashless ATM, which mimics the process of paying by debit card. But are the fees and the extra steps worth it?
World of Weed’s cashless ATM survived only a week at its store in Tacoma, Wash. The cashless ATM — which simulates a debit card payment by letting consumers initiate a cash withdrawal, then directs those funds to the merchant — is meant to make it easier for legal dispensaries and other high-risk stores to accept card payments.
But for Alden Linn, owner of World of Weed, it became a hassle.
“Having extra devices at the cashwrap took up valuable sales space,” Linn wrote in an email. “The time to check out was longer because of the missing integration with the POS. Lastly, the fees being charged at the cashwrap caused pushback from customers.”
Without integrating with the store’s point of sale systems, the process takes longer than a normal credit or debit card transaction — and the customer is charged a fee of about two dollars for the experience.
The store’s website now prominently states that it is “a cash-only establishment.”
The Joint, which also has a location in Tacoma, has also experienced some challenges with cashless ATMS, but it hasn’t pulled the plug.
“It’s kind of a complicated process, there’s a lot of steps as an employee, there’s a lot of buttons that you have to push,” said Eben Shay, an employee at The Joint.
However, Shay noted that more and more of his customers are using the store’s month-old cashless ATM, and that The Joint is getting more business because of it.
“It was just more ways to accept money, which just means more business for us,” Shay said. “I wouldn’t say the majority of the people use the cashless machine, but we have seen an increase week by week.”
Neither World of Weed nor The Joint identified the manufacturer of their cashless ATMS.
Cashless ATMS are among the more commonly pitched compromises for high-risk merchants, which can’t handle payment cards normally because banks don’t want to partner with them.
Sam Ditzion, CEO of Tremont Capital Group, which provides consulting to ATM and payments companies, said the legal pot industry is in a regulatory gray area because of inconsistencies between state and federal laws. Most banks don’t have any interest in becoming test cases for this market’s legitimacy, particularly since they risk heavy fines and other liabilities.
“It’s very stressful and frustrating for these dispensary owners because they need to move a lot of cash around and ... they don’t really have a solution that works well,” Ditzion said.