Cannabis payments are the newest addition to many dispensaries looking to boost basket size, increase revenue, and improve customer experiences.
But many cannabis retailers that accept debit cards are using a non-integrated payment system, which is incredibly inefficient.
What is a non-integrated payment system?
When a payment system is “non-integrated”, it is not connected to your dispensary point of sale software. Instead of automatically syncing sale amounts, a budtender has to manually enter data into the card reader and the POS.
Having an alternative to cash in the cannabis industry is huge, but non-integrated payments cost dispensaries thousands of dollars every month and actively hurt the customer experience.
Read on to learn the true costs of non-integrated payments, including an example that shows exactly how much money these solutions can waste per year.
Here’s how non-integrated payment solutions cost you money
It's crucial for cannabis retailers to understand the risks associated with non-integrated payment solutions. This industry provides a small margin for error so any lost revenue can have a significant impact on your business. Keep in mind that signing a long term payments contract means you're locked into these loss factors for the long haul.
Based on numerous conversations with dispensaries across the U.S., including Greatest Hits, these are the biggest loss factors associated with non-integrated payments:
Increased human error
This is the most significant revenue loser for dispensaries. Non-integrated payments require budtenders to manually input data into the card payment terminal and the POS.
Busy budtenders are expected to process dozens of transactions per shift while maintaining a high level of service for customers. This unnecessary manual data entry opens the door to costly mistakes.
For example, a simple decimal placement error could turn a $75 transaction into $7.50. This means you’re accidentally charging the customer nearly $70 less than you should!
Reduced efficiency
Time is money. If your store is busy and your staff is processing hundreds of transactions per day, your goal should be to automate as many steps as possible.
Non-integrated payments can add 60 seconds or more per customer checkout. If you’re processing 12,000 debit transactions per month, that’s 12,000 minutes (200 hours) wasted.
Decreased customer satisfaction
Scroll through a dispensary’s reviews on Weedmaps or Google and you’re likely to see “quick service” noted next to many 5-star reviews. You’ll also see “slow service” or “long lines” alongside most 1-star reviews.
Efficiency at the checkout is just as important to the customer as it is to you. Shoppers live busy lives and stopping by the dispensary should feel as seamless and quick as grabbing a cup of coffee.
Non-integrated payments not only add unnecessary time to every transaction, but they’re also clunky and don’t feel as smooth as traditional card payments.
Calculating dollars lost with non-integrated payments
Some basic math shows just how much loss non-integrated card payments cause.
Note: The formula below is based on the assumption that a budtender mistakenly misses a decimal when entering data ($7.80 vs. $78). There are other mistakes that could be less costly such as incorrectly entering a number ($68 vs. $78).
Monthly shrinkage = (Avg. monthly debit transactions x 1%) x Avg. debit amount
Here’s an example of shrinkage caused by non-integrated card payments:
Dispensary A averages 13,470 non-integrated debit transactions per month.
Their average debit transaction is $78.
Dispensary A’s budtenders make a manual entry mistake just 1% of the time (which is typical). This means they’re entering $7.80 instead of $78.
That’s a loss of $70.20 every 100 debit transactions. Meaning Dispensary A is losing $70.20 a total of 134.7 times per month.
$70.20 x 134.7 = $9,455.94 in losses per month.
That means Dispensary A loses $113,471.28 every year!
This amount of shrinkage is completely avoidable. All Dispensary A needs to do is switch to an integrated payment solution and they’ll save close to $120,000 per year.
Ready to switch?
Flowhub Pay is a long-term, compliant solution built directly with an in-house payment processor. There are no middlemen or re-sellers involved. The solution does not require manual data entry into Flowhub or on the terminal. It’s all automated.
Schedule a payments consultation to learn more about Flowhub Pay and get approved in 1 day.
