War Against Kratom Intensifying: T1 Payments, The Kratom Industry's Only Major Credit Card Processor Has Unexpectedly Shutdown, Causing Major Losses And Reduced Capabilities For Vendors Industry-Wide
As discussed earlier this week on The Kratom Herald, Big Pharma and the FDA have launched a full-scale attack against Kratom including the FDA de-facto banning Kratom via declaring that all Kratom products are considered unapproved new dietary ingredients and are therefore illegal, the U.S. Marshalls raiding a Florida-based vendor and seizing 34,000 kilos of Kratom, rising Kratom import seizures at the border, in addition to the FDA publicly attacking Kratom’s reputation and calling it addictive and dangerous for the first time in years.
Overall, all of these things are eerily reminiscent to when Kratom was almost banned in 2016, and there is an overall negative feeling hanging over the Kratom world that the FDA will continue to launch big attacks.
Lo and behold, the next big attack on Kratom has arrived, and this attack has shaken the Kratom industry to its core. Specifically, the Kratom industry’s only major credit card processor, T1 Payments, has suddenly shut down, crippling the ability of the Kratom industry to process credit card payments.
In-fact, T1 Payments is effectively the only institutional credit card processor for the Kratom industry, and due to this fact practically every Kratom vendor depended on T1 Payments to process credit cards.
A brief side point is that the only reason T1 Payments was effectively the only credit card processor in the Kratom industry, unlike any other legitimate industry where a vendor can choose from dozens of different credit card processors, is that the United States government has secretly directed that banks should not offer services to Kratom-related companies. This policy started under Operation Choke Point, which gave the Department of Justice sweeping powers to cut-off various industries from being able to use the financial system. Even after Operation Choke Point ‘ended’ in 2017, nothing really changed for the Kratom industry, since the government continued to secretly direct banks to not offer services to Kratom-related companies.
Therefore, the government’s shadow-banking regulations led to a severe lack of credit card payment processing options in the Kratom industry, to the point that only T1 Payments, a high-risk processor based in Europe, was offering services to the Kratom industry.
This led to essentially every vendor in the Kratom industry using T1 Payments to process credit cards, and since every Kratom vendor was using T1 Payments, this created a serious centralized point of failure for the Kratom industry.
Now it appears that the United States government has exploited this centralized point of failure, since without any warning T1 Payments has shuttered its doors to Kratom vendors. Apparently this started earlier this week when T1 Payments stopped sending credit card settlement money to Kratom vendors and stopped responding to customer service, and finally T1 Payments sent a letter to Kratom vendors today declaring that their accounts are terminated.
This has left Kratom vendors with a multitude of problems. First and foremost, now there is no large-scale credit card processing solution for the Kratom industry, and this will make it a constant struggle for Kratom vendors to process customer’s credit card transactions. Likewise, customers may find that it becomes less straightforward to buy Kratom with a credit card, and many vendors may stop offering card services from time to time as they juggle between small-scale credit card processing solutions.
Another serious problem is that T1 kept a sizable amount of Kratom vendor’s credit card transactions in reserve, and industry-wide T1 Payments is likely holding onto many millions of dollars of Kratom vendor’s money.
There are serious doubts to whether these reserves will ever be paid out, since due to the high-risk nature of T1 Payments in the first place, T1 put clauses in their processing contracts that they can hold onto reserves indefinitely after shutting down services.
Therefore, Kratom vendors face a double-whammy of losing their reserve money, which is upwards of a million dollars or more for the bigger vendors, and simultaneously vendors will have a much harder time making money since their credit card processing capabilities have been relatively crippled.
Ultimately, this incident is one of the biggest attacks in history on Kratom vendors, and it seems perfectly orchestrated to weaken the entire Kratom industry.
On a final note, although this is by no means a death blow to the Kratom industry, it is certainly an ominous sign that something is very wrong, especially considering all of the other anti-Kratom government actions in recent weeks.