The Senate is reviewing a new “SAFE” banking bill on September 27th. The major change from existing SAFE banking legislation? Senators have added the word “regulation” to the end: thus an appended “R” offers “SAFER” banking.
The POSaBIT team expects that this will pass in the Senate, but not the House. Any substantive movement this year is very unlikely. Indeed, we give it less than a 10% chance of passage before the winter recess.
Update 9/27: The bipartisan Secure and Fair Enforcement Regulation (SAFER) Banking Act, sponsored by Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), passed out of the Senate Banking Committee on September 27th. Majority Leader Chuck Schumer (D-NY) said the vote “underscores how much momentum we have right now”. Many expect to see a floor vote in the Senate soon.
We are cautiously optimistic about the real impact of SAFE banking. Even if the bill ultimately passes both chambers and is signed by the President, it does not reschedule cannabis. What passage of the bill does mean is that:
- More banks will likely begin to open their doors to bank cannabis-related businesses.
- Major card networks could begin allowing credit for cannabis-related businesses -- though this is up to Visa and Mastercard, not the government.
- Solutions that include cryptocurrency and gift cards likely won’t be needed as consumers will be able to use debit, and possibly credit, solutions without issues.
If, as we expect, SAFE banking doesn’t pass in 2023, we face an election year. Most experts predict that the bill will sit untouched until 2025, after all the dust from the election has settled. Experts also anticipate that, if Biden does not win in 2024, the SAFE bill will most likely die under a Republican administration and is unlikely to receive any attention until after the 2028 election.
ARE YOU READY IF SAFE BANKING PASSES?
Yes. POSaBIT is already an approved Master ISO for credit card transactions, and is processing credit today for CBD and glass stores.
Existing POSaBIT Payments customers will simply need to sign a one-page addendum to their contract allowing POSaBIT to underwrite them for credit. We expect this task will be easily completed between the time SAFE passes and when it actually takes effect several months later.
No new hardware will be needed: the terminal POSaBIT merchants already have can be repurposed for credit. If by chance a hardware change is required, POSaBIT will replace it at no cost to the merchant.
We expect credit card rates to be in line with typical “high risk” rates we already see in the market today at places like vape stores, in the adult industry, and gambling. These rates are usually between 3.95% and 5.95%. Typically there is no charge to the customer. However, if a merchant wishes to charge a non-cash transaction fee to help offset their cost, we expect that to be an option.