GreenGreen stands at the intersection of financial technology and compliance for the cannabis industry. By creating a complete compliance focused payment and credit solution for regulated dispensaries we close the loop on tracking and allow customers to pay at point of sale using their mobile phone. Our PCI compliant e-wallet system and strict due diligence merchant on-boarding process allows banks the comfort of knowing that every dollar that flows from the merchant is tied to legal transaction and can meet regulatory scrutiny.
How did the whole idea for Greengreen.io come to materialize?
While I was doing an MBA in Finance, I became fascinated with how essential credit is to a functional economy. I was surprised to learn that even with the legalization of marijuana in certain U.S. states and now across Canada, access to credit is a massive issue. In a lot of places, cash is a rarity nowadays with most people paying for things with credit cards and for businesses it’s critical to be able to offer consumers the ability to pay using their credit cards. Yet, in the cannabis industry credit card companies will not provide payment systems to these businesses so they are forced to operate as cash only. To address what I see as an unfair practice by the card networks and providers against the legal cannabis industry I developed GreenGreen as a credit payment system for cannabis retailers.
Is this your first business in the Cannabis space?
Yes. I like a challenge, the cannabis space appeals to me because it’s so new and offers so much opportunity to innovate. But at the end of the day cannabis is still a product and a lot of business lessons learned from traditional manufacturing, marketing, and payment processing can be applied to this industry. The regulatory complexity is obviously a major hurdle, but it’s also a reason why GreenGreen is needed.
People can now purchase Cannabis through your credit-based app, tell us more?
Visa and MasterCard aren’t the ones lending the money to the consumer, the banks are. The card networks just settle accounts between the banks. There is really nothing magical about what they do, just legally complex. We let users sign up, make a purchase, and instead of paying off their card at the end of the month, they pay us. We send the money to the merchant on a regular basis and we try to make that whole process as painless as possible for both sides. We are really a charge card, where we expect people to pay off their tab in full at the end of the month, and in exchange for that we don’t charge the consumer any interest for a few weeks from the date of purchase. Plus, the customer doesn’t have to stand in line to pay ATM fees to take out and spend their own cash. It’s a good deal for everyone.
People, who purchase Cannabis on credit through the app using their existing credit card Visa/Mastercard attached to the GreenGreen account, can you foresee any issues with Visa or Mastercard in future?
That’s kind of the beauty of our system, because we issue the credit directly. We do take a photo of your credit card, but that is used as a secondary piece of ID, along with your driver’s license, to establish your credit. You will never see a charge from GreenGreen on your Visa statement, because we don’t use their infrastructure. We had to build our own secure payment system.
What have the main challenges been in getting the business off the ground?
The primary one has been convincing the banks to deal with us. I mean when you try telling a banker that “we lend money to cannabis users and expect to get paid back” they look at you like you have three heads. But cannabis users are not a bad credit risk, which is what we care about. The majority already have a credit card of some sort but can’t use it in the dispensaries they want to shop at because nobody will give the store a merchant account. Pretty much all existing payments systems are built on tying into the Visa/MC/Amex pool of credit card users, so when you tell people you’re bypassing that system it’s hard for them to wrap their heads around it. The second biggest issue has been convincing investors that it can be done. Visa/MC are so dominant in the market that it’s challenging to get investors to realize that you can compete against them. Educating investors “here is how your credit card actually works, and here is this massive market where you can’t use your traditional credit card, so we need to build another payment network” has been a lot of work. Let’s just say that the investors we deal with have vision and strong nerves.
Is there a level of anonymity with your platform protecting customers from data swapping issues, which may protect them from future problems at borders for example?
In Canada we avoid that by having a separate infrastructure. Since none of the information about our Canadian users is held in the US, we have a very strong privacy angle. If you use your existing Visa card, the information is routed, processed and stored in the US, where the PATRIOT ACT allows the US government pretty much unlimited access to that information.
You are using QR Code technology to enhance payments, explain to us a bit about the tech process?
A QR code is quite elegant. You can encode a ton of information into it and create a secure way to jump the airgap between what the merchant sees about you and what the consumers phone needs to know. When a consumer needs to make a payment, they just scan the merchant’s QR coded invoice on a tablet or phone, and we know all the transaction details, but the merchant never has access to your private information. They just know that that invoice has been paid, and that they will be getting their money from us soon. Really not much different than using a Starbucks app on your phone to pay for coffee.
How has the uptake been for retailers in the Cannabis space?
We have a very long, and quickly growing waiting list. Particularly in the US, where the cash problem has been a massive headache for a long time. They’re happy to pay higher transaction fees because the customers are willing to spend more, the dispensary isn’t stuck trying to explain bags of cash to their bank, and the whole check out process isn’t dragged to a halt by the need to line up at an ATM to withdraw money. Originally our focus was in Colorado, but we’re getting inquiries from all over the place, including some of the newly legalized states out East who don’t have the experience and infrastructure to handle the waves of cash about to hit them.
Your product seems like a very safe alternative, instead of retailers handling vast amounts of cash, which invites crime. Besides safety what are the main advantages of using your product?
From the customer perspective it’s an interest-free short term loan, so if you want to make a purchase today, and pay your bill off next week or at the end of the month, you can do that, while saving yourself hundreds of dollars in ATM fees a year. From the merchant perspective we can increase sales by 20-30% per customer, due to higher average ticket sizes, and help them avoid the cost of handling cash, which really adds up, and can be as high as 10% of their revenue. But one massive hidden benefit is that it helps legitimize the industry. They can point to electronic ledgers when dealing with State auditors and their banks to show that they’re meeting the requirements of their license, aren’t laundering money, and are meeting their tax obligations. So that feeling of not being treated like a criminal is really something we are seeing as resonating with merchants.
You also offer merchant accounts to other high-risk areas? What is your processing fee for retail/online?
Our general fees start at around 5.95% + $0.25 per transaction. Obviously, that will come down over time and with volume, but most merchants we talk to feel it’s fair, it’s a few more percentage points than accepting Square/Stripe/PayPal, which they can’t get access to anyways. Our online strategy is cautious by design. Once customers have established credit and have hooked up their bank accounts to our service, we are happy to deal with online merchants who can pass our due diligence.
What is the 5-year plan for Greengreen.io?
We think this idea of “maintaining your privacy while using your phone to pay” is something that appeals to all consumers. And retailers are desperate to get away from the huge fees they are charged by the traditional credit card models. The market potential is already massive, and the need is real, so we are also looking at other high-risk markets we can service, while expanding our service to also help small businesses. Companies like Square and Stripe must pay their pound of flesh to Visa/MC/Amex, meaning that they can’t price below the rates set by those networks. Our eventual goal is to be able to offer both merchants and customers a cheaper way to pay each other, while delivering a great user experience.