Cash Payments In Cannabis Largely Driven By Fee Avoidance, Hypur Survey Shows
Visa Inc (NYSE:V) or Mastercard Inc (NYSE:MA)-enabled payments are not the saving grace for the cannabis industry, as consumers still prefer other payment methods, according to a new nationwide cannabis consumer payment preference survey conducted by payment and banking platform Hypur.
Purchasing behaviors in cannabis are largely driven by “convenience fees,” the survey said.
Eighty-two percent of cannabis consumers surveyed said they are “frustrated” with or "don’t think it’s right” to be charged convenience fees on payment options.
This means that dispensaries that do charge these fees are at risk of higher customer dissatisfaction scores.
Cannabis Consumers Have Unique Preferences
Seventy-one percent of cannabis legal consumers still use cash to complete their purchases, the Hypur survey said.
This should come as no surprise to anyone who’s visited a dispensary in the U.S.: as most may have noticed, a large portion of marijuana stores operate on a cash-only basis.
Digging deeper into Hypur’s survey, we found that traditional assumptions about retail and e-commerce preferences aren’t necessarily true for cannabis purchases.
The firm’s numbers show that convenience fees — additional charges — for credit card and/or digital transactions inhibit consumers’ willingness to use of digital payments for cannabis transactions.
Hypur CRO Says Digital Payments Are A Better Solution
"Cannabis customers will go out of their way to avoid costly convenience fees that many credit cards require," Tyler Beuerlein, Hypur's chief revenue officer, told Benzinga.
"It is clear that convenience fees help drive consumer behavior, and Hypur Pay allows customers to pay for their cannabis purchases directly from their personal bank account with no sign-up or added transaction fees."
For dispensaries that only accept cash, 28% of survey respondents said they would prefer to pay with Hypur’s mobile ACH solution if given the choice, the company said.
“Our survey data shows credit cards will not be the white knight for the cannabis industry like many make them out to be. Digital payment solutions like Hypur Pay are well-positioned to better serve the demands of customers and the needs of businesses,” Beuerlein said.
Hypur's Cannabis Payment Survey Takeaways
Other interesting findings from the survey include:
- 55% of people said they prefer to pay with cash.
- 70% of cannabis consumers will choose a dispensary with no convenience fees over one with convenience fees. This means convenience fees greatly impact consumer purchasing behavior.
- Although not yet included in Hypur’s external surveys, internal customer surveys indicate the COVID-19 pandemic is resulting in more consumers and patients wanting to pay via cashless and "touchless" payments, according to Hypur.
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Image by Ilona Szentivanyi. Copyright: Benzinga.
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