Visa recently issued a memo detailing a common scheme being used by businesses in the cannabis industry—“cashless ATM” point-of-sale (POS) transactions. Cashless ATM transactions take place when a merchant takes an order, rounds up the total to an even number, and then runs a transaction, miscoded as an ATM withdrawal.
While cannabis companies weren’t explicitly mentioned in Visa’s memo—there’s a good chance it was directed at such companies given the prevalence of cashless ATMs in the cannabis industry. With few options left in the cash-only industry, businesses will try just about anything to make credit and debit card purchases possible.
“Visa is aware of a scheme where POS devices marketed as ‘Cashless ATMs’ are being deployed at merchant outlets and are operating in violation of the Visa Core Rules and Visa Product and Service Rules and Plus Core Rules and Plus Product and Service Rules,” the memo reads.
Typically, a purchase is rounded up to the nearest denominator of twenty dollar bills. Cashless ATMs mimic standalone ATM machines, running the transaction backwards, so to speak. Visa explained that the practice is in violation because it affects the integrity of an ATM transaction, something Visa never intended to do.
“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs. However, no cash disbursements are made to cardholders,” the memo continues. “Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement…”
Alternatives are provided from technology platforms that are specifically tailored to meet the financial needs of merchants in the cannabis industry.
“The cashless ATM trend