Technology and payments insights for cannabis businesses

Behind the Scenes

How a YC startup from India pivoted to building ACH APIs for cannabis merchants in the USA

Sowmya Rao
March 27, 2021

We are a YC startup from India that pivoted to building ACH APIs for cannabis merchants in the US. In February 2022, we crossed $500,000 in ACH payments processed from US retail consumers. That’s right - B2C payments, via ACH. This is the story of how we began.

How a YC startup from India pivoted to building ACH APIs for cannabis merchants in the USA

Typically early-stage startups talk about their fund-raise, or announce a new feature, (or … launch their product). We’ve been in beta for a few months now, and have been steadily crossing internal GTV milestones. $500,000 felt like the right time to tell you how we got here, and where we plan to go. 

Wait, what is PaySwifter?

PaySwifter builds ACH APIs for the $ 25 billion and growing cannabis market in the United States. We’re Stripe for Cannabis.

Due to federal-state level differences in legality, cannabis merchants can’t access fintech services built for general businesses, including digital payments. With PaySwifter’s APIs, any dispensary, MSO, or cannabis software provider can start accepting digital payments, today.

The value we provide to one of America’s fastest growing markets:

Imagine you have customers who want to buy from you. 

Imagine you can’t sell to them online because you have no way of accepting online payments easily. 

Your customers still pay you. But in cash. Cash can get stolen. 

So you need an armored car to take the cash to the bank. 

And a guard. 

Or two. 

Your average order values can’t increase because you’re limited by cash in the wallet. 

Oh, and you need retail staff to count a lot of money at the end of their shift. Operational hassle.

Hard to believe, but I’m not talking about the 1980s. This happens today, in fact it's happening right now, even in San Francisco! And we’re here to fix it. When we learnt about cannabis, we understood that the cannabis industry today faces stigma much like the alcohol industry did many decades ago. Our vision is to provide reliable, helpful fintech to this vastly underserved market.

For a dispensary, digital payments seem out of reach. Understandably, most dispensaries end up accepting only cash payments, or use gray-area payment solutions. By integrating with platforms, by having transparent APIs, and by offering no-code solutions, our aim at Pay Swifter is to help all cannabis dispensaries leverage the power of 2x cart value.  

Further, while certain cannabis payment solutions are in the gray area,  ACH, and the way we’ve implemented our ACH APIs, are fully compliant with relevant laws.

So - how did you get here?

There’s a great story here, and it involves serendipity and fumbling our research. 

About nine months ago, we were getting ready to pitch our then MVP - interactive email combined with one-click checkout, that could increase revenue for and dramatically transform e-mail marketing. Our first pitch was to one of California’s leading cannabis dispensaries - a lead we got from a post on YC’s internal forum. 

About 5 minutes into the conversation, we lost that pitch with these infamous words: “We can integrate with any payment provider - we’re set up with Stripe right now, it’ll only take you 2 minutes to plug in your credentials, and try us out”. Our research missed one critical piece of information - most payment providers, most banks, and all card networks don’t process cannabis transactions due to federal-state differences in legality. 

The merchant we were speaking with couldn’t use our product unless we integrated with an ACH provider who did support cannabis - and they’d already started down this path of working to create an alternative. We felt there was a real opportunity here for our tiny but mighty team of 5 people. And that’s how we began.

What we’ve learnt so far

The first few weeks, we faced a very steep learning curve, from understanding NACHA compliance, to figuring out ACH payment windows, from designing a deceptively simple looking calendar-day batching and reconciliation mechanism, to memorizing ACH return codes and wireframing retry flows.

- We did a lot of research to find the right API and fintech partners who were comfortable with cannabis merchants, and where we couldn’t find them, we decided to build /fork and maintain the core infrastructure ourselves. 

- We’ve learnt how many banks and credit unions there are in the United States, and the challenges faced by bank-linking third party software when customers from smaller, local banks attempt ACH authorizations. 

- We’ve designed a flow that allows for maximum flexibility to a dispensary to tailor when they’d like to collect the authorization, and when they’d like to charge it - to keep them compliant with the payment on delivery rules for cannabis.

- We’ve learnt what types of conditions are most likely to result in an ACH return, and we’re working on a model that can help us alleviate this risk at the least cost to the merchant. 

- We’ve designed a tipping flow that’s taught us about tipping behavior in dispensaries, and the power of default buttons for suggesting tips.

- We are now a compact team of 9, working cross-border, remote-first, and learning and solving complex, new and interesting problems every day (hi there - R16 return.)

In the last few months, we’ve grown in confidence and (not to jinx it) competence with respect to understanding and running near-error free ACH flows. Our product and engineering teams will write more detailed blogs on our infrastructure, and core product questions we grappled with, in the weeks to come.

From the perspective of growth, we wanted a resounding YES to the question of whether customers would be willing to link their bank accounts, and pay online for an otherwise-cash transaction. Today, we are confident in our answer. For a cannabis dispensary, online payments work, and they can increase your average order value upto 2x.

Why are we celebrating this milestone? 

There were times when our imposter syndrome kicked in (including as recently as pressing the publish button on this post about thirty minutes ago), especially for me as CEO. Was this a milestone? Should we even write a blog post about this, or keep our heads down and keep building? 

As recently as last week, we had a CTO tell us “integrating with your APIs was very easy, a really smooth experience, and everything just worked”. While we’re working on getting his testimonial on our site, hearing these words made us take a moment to just feel happy, to feel good about our work. As a female fintech CEO, I’m brushing aside self-doubt, and I want to share our team’s moment of strength, and joy, with you. 

But, what about legalization?

Ever so often, someone will ask us, “What will you do when cannabis is legalized? Will you still serve this market? Will it make sense for you to build for such a niche?” 

We have the same answer to that question that we did nine months ago - when our team decided to work on this opportunity. Cannabis isn’t going anywhere. Other regulated industries aren’t going anywhere. ACH isn’t going anywhere. 

What does the future look like? 

We think of ourselves as being at pretty much Day 1 of our journey. Every day we talk to merchants, consumers and platforms, and we see and understand the potential to build on top of ACH. Our APIs work equally well for B2B use cases, and we have a robust roadmap in place already to build for business needs of dispensaries and platforms.

Tldr: we’re starting with payments. We’re laying the foundation for a deep and helpful fintech experience tailored to the unique needs of regulated American businesses, including, but not limited, to cannabis. 

There’s more to come. 


If you work in cannabis, or in US fintech (or fintech in general), we would love to talk to you - we are always looking to learn, to find API partners, to share our learnings, and to take you along the way as we grow. Please email us at hello+learn@swifterhq.com 

From building ACH return and risk models, to increasing payment conversions, to designing accountant-friendly reconciliation dashboards - we have a lot of exciting work to do. Our founding team has previously worked at Freshworks, Browserstack, JP Morgan, Uber, and Google. If you would like to work with us, please email us at hello+careers@swifterhq.com 

Lastly, we are gearing up to raise our seed round. We would love feedback and advice from fundraise veterans at hello+raise@swifterhq.com

This post is 1500+ words! Thank you for patiently reading about our journey, and for getting to know us a little better. Please sign up to our newsletter/blog updates, where we’ll talk about our insights into this niche market, and our journey in building fintech in the US, for a $25 billion and growing high-risk merchant category.


Sowmya, Arnav, Anbu, Neran and Saurabh
Founding Team - Pay Swifter

If you've stuck around this far - Here's a picture of our founding team from October last year. We haven't all been in the same room since - remote is the new normal!

L to R:  Neran (photoshopped), Saurabh, Sowmya, Anbu and Arnav

Pronunciation Guide:
Sowmya - sow like “how”, mya like “mia”
Arnav - ar like “arr matey”, nav like “guv”
Anbu - an like “un”, bu like “boo”
Neran - ne like “nee”, ran like “run”)
Saurabh - sau like “sauron”, rabh like “rub”)

Sowmya Rao

I'm the CEO and General Fixer at Swifter - email me at hello+sowmya@swifterhq.com. When I'm not at work, I read science fiction, solve Sudoku puzzles, walk my dog, and chill with my family.


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