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Visa cracking down on cashless ATMs

Visa has starting warning businesses that using so-called cashless ATMs as a workaround to accepting credit or debit cards could lead to penalties or other action.

The December 2, 2021, memo says that Visa is “aware of a scheme” where businesses miscode point-of-sale transactions as ATM cash disbursements. The business rounds up the purchase amounts to look like ATM cash transactions.

I went to a store recently that did this. My purchase amount was $78.00. The store charged $80.00 to my debit card and gave me $2.00 change. It also charged a $4.00 ATM fee.

Nathaniel Gurien, CEO of Fincann, which provides financial services to marijuana businesses, called the scheme “clever, attractive, and likewise fraudulent.”

Unfair banking laws have created the need for marijuana businesses to find workarounds for payment. An all-cash business is not only inconvenient for customers, but also an invitation to theft and robbery.

Yet, miscoding marijuana sales not only violates the policies of payment processors such as Visa, but it also potentially violates federal law.

The penalties to businesses could be high. Under Visa’s rules, miscoding transactions could lead to fines of $2,500 per day, applied retroactively to the first day of noncompliance.

How likely is it that Visa will crack down on a marijuana business using the practice? That’s hard to say, but in 2019, one-third of San Francisco’s license marijuana stores had their cashless ATM devices abruptly shut down, leaving them unable to accept payments.

Adapted from Marijuana Moment Newsletter, December 13, 2021.
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