Exclusive Interview with CanPay CEO Dustin Eide
Banking and payment services remain a challenge in cannabis industry due to federal illegality. CanPay launched six years ago to offer cannabis operators and consumers a solution. It provides a transparent, stable payment service to the cannabis industry by facilitating payments through the Automated Clearing House (ACH) network. CEO Dustin Eide sat down with New Cannabis Ventures to discuss CanPay’s network, its market reach and a recent payments milestone.
Listen to the entire interview or read the summary below:
The Genesis of CanPay
In 2014, Eide was working in traditional merchant services and credit and debit card processing. He realized that anyone who was able to provide a legitimate payment solution for cannabis would quickly stand out. When the Cole Memo and FinCEN guidance were released that same year, he saw the opportunity to start building the CanPay model.
The company has a tight leadership team, according to Eide. He is joined by his business partner Carrie Toppano, who serves as COO of CanPay. Though relatively early-stage, the company has filled the General Counsel role. Cassandra Ingram helps keep CanPay compliant with regulators and federal guidance, which is important for the company’s banking partners and merchants.
The CanPay Solution and Network
The ACH network is the standard checking account to checking account transfer system, according to Eide. CanPay leverages that network for its consumer model by working with financial institutions already banking in the cannabis space. Currently, more than 110 financial institutions across the U.S. are approved to receive CanPay deposits, according to Eide. The app connects directly to consumers’ checking accounts and allows them to make purchases at the more than 800 retailers across 32 markets in the CanPay network.
Retailers in the CanPay network include 10 of the top 13 publicly traded MSOs, according to Eide. It also works with many smaller operators in the cannabis space. CanPay works with retailers that already have established relationships with financial institutions that can join the company’s network. The CanPay team works diligently to ensure the company adheres to federal guidance and provides a transparent service.
The app is available with no fees for consumers and a low cost for merchants. CanPay has maintained the same rate for merchants since it launched back in 2016.
The Cannabis Payments Landscape
Eide views cannabis payment services in two different groups. In one bucket, there are services that attempt to work through traditional debit and credit systems, but Eide considers many of these services a creative workaround or even a direct violation of card rules relating to cannabis. In the other bucket, there are services, like CanPay, that operate via the ACH network. CanPay stands out because the size of its network and its spending limits. Some CanPay consumers can spend up to $3,000, according to Eide.
CanPay solves for payment challenges created by the current regulatory environment, but what happens when regulations evolve? Eide anticipates that there will still be significant due diligence requirements for financial institutions looking to provide payment services even with SAFE Banking. CanPay will be ready with an established customer base and lower pricing. The CanPay team is also closely watching for movement on federal legalization and preparing to adjust the company’s model as needed.
Looking at Growth Opportunities
CanPay recently hit a significant milestone: its network has exceeded $500 million in lifetime transactions. The private company does not share revenue numbers, but it has been doubling its growth year-over-year, according to Eide.
Thus far, CanPay has been bootstrapped, which has allowed the company a great deal of flexibility, according to Eide. But the team is open to fueling the company’s growth with outside investment should the right opportunity arise. The company is committed to offering a legitimate, transparent and stable payment service. If acquiring another company or being acquired would further that mission, the team would be open to exploring it.
In the meantime, the CanPay team is concentrating on accommodating its continued growth. The company is managing the onboarding of new stores and new consumers. It is also adding to its team to support its live chat function, which allows consumers to engage with the company in real time, and it is preparing for new developments around ecommerce and payments.
To learn more, visit the CanPay website. Listen to the entire interview:
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March 31, 2022 at 11:19PM
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