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Visa takes aim at cashless ATMs

A Visa bulletin concerning cashless ATMs, published Dec. 2, 2021, is causing a stir in the ATM and cannabis industries. At issue is a prevalent scheme involving POS devices posing as ATM terminals and routing sale transactions through debit card networks to make sales look like ATM cash withdrawals. This practice violates Core Rules and Product and Service Rules for both its payment card and debit card networks, Visa representatives stated.

André G. Herrera, chief compliance officer at Hypur and former commercial banker and payments executive with 30 years of compliance experience, said Visa’s recent communication comes as no surprise. Visa rules are designed to support payment infrastructure and provide a stable payment environment, he stated, and “do not make false statements to your financial institution” has always been Rule Number One.

“Although cannabis is not specifically mentioned in the Visa notice, the use of cashless ATM’s in dispensaries is widespread,” Herrera said. “Over the years, numerous cannabis payment solutions have come and gone. The common denominator with many of these solutions is the lack of transparency. Unscrupulous payment providers often use shell companies, offshore banks, or are purely deceptive to the banks.”

High risk, zero tolerance

Visa additionally noted that high-risk merchants, who would not otherwise be able to accept credit cards, due to network rules or regulatory restrictions, use cashless ATMs as a workaround. For example, Visa added, cannabis dispensaries typically round up a product sale to an even dollar amount and provide change to a buyer, making the transaction appear to be an ATM cash withdrawal. Such a practice miscodes a transaction and obfuscates its true purpose.

“Acquirers miscoding POS purchase transactions as ATM cash disbursements are in violation of these requirements,” the Visa bulletin stated. “Additionally, any obfuscation of information from transactions to further this scheme also violates these requirements. This includes non or misidentification of a merchant outlet (as these are POS purchase transactions) or using altered or fictitious location information.”

Bruce Renard, executive director at the National ATM Council Inc., noted that cashless ATM operators claim to be legitimate but ATM acquirer processors and sponsoring banks have informed ATM industry ISOs and deployers that network rules prohibit presenting sales as ATM withdrawals and there are no “workarounds” for these rules.

“To NAC’s best knowledge and belief, there is a ‘zero tolerance’ policy currently in place on the part of Visa and Mastercard global financial networks, ATM sponsoring banks, and ATM processors, who have taken the position that these cashless ATM terminal deployments and transactions are disallowed and, if in a cannabis dispensary, unlawful,” Renard said.

ATM compliance

Visa pointed that its Plus network is reserved for ATM cash disbursements and any ISO or merchant acquirer that places ATMs at merchant locations must register with the Plus network under the appropriate third-party category. Failure to comply with Plus network rules may result in substantial non-compliance assessments and penalties, Visa added.

“Acquirers have an obligation to conduct proper oversight to ensure they and their ATM operators and independent sales organizations comply with the Visa Rules,” Visa wrote. “Prior to entering into an ATM operator agreement, an acquirer must perform a background investigation and inspection to determine that a prospective ATM operator does not have any significant derogatory background information about any of its principals.”

Herrera pointed out that cannabusiness merchants who are transparent with financial institutions and comply with FinCEN and BSA/AML requirements can find legitimate avenues to financial services. “There is a significant amount of initial and ongoing due diligence that a bank or credit union must conduct in order to service cannabis accounts,” he said. “The institutions that I know in the space have set the bar high, with transparency throughout including their banking regulators. Done properly, cannabis businesses are the most transparent customers that a cannabis bank or credit union has in their portfolio.”

ATM enforcement

Renard stated Visa has advised NAC that it plans to enforce Plus network rules throughout the ATM ecosystem and identify and terminate violators. “We have been specifically advised that a significant number of cashless ATM terminals have already been shut down in the field, with the independent deployers cut off by their ATM ISOs, sponsoring banks and processors,” he said.

Herrera mentioned he recently identified anomalous merchants during a routine ATM portfolio review. “Utilizing my banking and payments experience along with technology tools, I was able to identify suspect and deceptive merchants,” he said. “The business names were modified or disguised, or even totally miscategorized in an attempt to deceive and conceal.”

Herrera noted that bad actors frequently target cannabis operators who are desperate for financial services, sometimes going as far as asking merchants to sign blank applications that sales agents will complete. He cautioned operators to be highly suspicious of third-party service providers who claim to be “completely legal.”

For additional information about compliance and oversight, visit Visa’s content library at 

This article originally appeared December 15, 2021, in The Green Sheet:


Dale S. Laszig, vice president, content marketing at Mobile Marketing & Technology and managing director, DSL Direct, is a payments industry journalist and content strategist who writes for multiple trade journals. Follow her on LinkedIn at and @DSLdirect on Twitter.