Mastercard Blocks Debit Card Purchases for Legal Marijuana in the US
Mastercard, the financial payment company, has taken measures to block US customers from using its debit cards for legal marijuana purchases in shops due to the federal illegal status of marijuana in the country. This decision was prompted by the discovery that some shops were still accepting debit payments despite the federal ban.
In response, Mastercard swiftly conducted an investigation and directed financial institutions providing payment services to cannabis merchants to terminate such transactions. The move comes as the federal government considers cannabis sales illegal, making them incompatible with Mastercard's systems.
The crackdown specifically targets marijuana businesses, particularly dispensaries, to prevent them from offering debit card payment options requiring customers to enter their account's PIN number. While 38 states allow medical marijuana use and 23 states permit recreational use for adults over 21, Mastercard's decision could have implications for the growing legal cannabis industry and consumers seeking convenient payment methods.
In contrast to the US, where legal marijuana transactions mostly rely on cash, Canada, which legalized cannabis nationally in 2018, often allows customers to use credit or debit cards for cannabis purchases.
This financial restriction highlights the legal and financial ambiguity within the cannabis industry, even as more states in the US legalize the drug. Many large banks and credit card companies have generally refrained from facilitating cannabis purchases due to federal marijuana laws, leaving buyers in legal states with limited payment options.
The U.S. Cannabis Council estimates that the industry will generate about $30 billion in revenue this year, primarily through cash transactions, which advocates believe poses risks to workers and communities.
There are ongoing efforts to allow cashless transactions at dispensaries, with proponents arguing that conducting businesses solely with cash invites potential theft and endangers employees. The Democrat-controlled US Senate aims to pass the SAFE Banking Act, which seeks to protect banks and their employees from punishment when serving state-legal cannabis businesses. However, some lawmakers express concerns that this could create loopholes in money-laundering laws.
A survey conducted by the Pew Research Center in October revealed that 88 percent of Americans support legalizing marijuana for medical use, and 59 percent support legalization for recreational use, indicating growing acceptance of the drug's legalization. Support is lower among Republicans and individuals aged 75 or older.