LAS VEGAS —Valley Bank, a $41 billion-asset institution based in New Jersey said its new payment platform will provide a solution to an industry-wide cash issue plaguing its cannabis-related businesses by allowing their customers access to a mobile wallet payment system.
The nationally chartered bank, which has branch locations across New Jersey, New York, Florida and Alabama, currently serves five of the top 10 multi-state cannabis-related business operators, Valley Bank Chief Digital Product Officer Stuart Cook told Industry Dive at the Money20/20 conference in Las Vegas on Tuesday.
The new payment platform, called Valley Pay, is expected to launch with a pilot program in the coming months. The mobile app operates similar to a reloadable Starbucks wallet gift card, Cook explained.
"It's merchant branded, and that provides a lot of economic benefit to the merchant, in terms of the costs of those transactions," Cook said. "It also builds a whole bunch of other benefits in terms of building loyalty and a marketing solution as well."
Customers can fund the card from their existing bank account and present a QR code at the point of sale, he explained. "The beauty of it is it's real-time loading, and it's real-time funds for the merchant. So we're solving a number of problems in the payment process that exists," Cook said.
Valley Bank is launching the platform in partnership with a "large processor" who wants to remain anonymous, Cook said.
Valley Bank has been serving the cannabis space for a year and has built a service and compliance system that involves transporting and depositing the large amounts of cash the dispensaries collect on a daily basis.
Despite a growing number of states that have legalized marijuana, its federal status as a Schedule 1 drug means most banks and major credit card issuers won’t allow open accounts or process the transactions.
"With the explosion of legalization across states, there are some big businesses that have unique banking needs. They’re underbanked, underserved, and it's over cashed. There's just cash everywhere," said Cook, adding one of Valley Bank’s cannabis clients deposits more than $1 million in cash a day. "Unsurprisingly, there's a huge pent up demand across these businesses to digitize the payments to get cash out of the businesses."
Eliminating the industry’s reliance on cash is not just a safety issue for marijuana dispensary operators, Cook said. "It’s also about consumer desire.They don't really want to be carrying large amounts of cash or making these transactions in cash," he added.