America’s firearms and ammunition industry is the most profitable industry in the world. Learn the ins and outs on what it takes to get approved as a firearms retailer merchant and start accepting payments with a gun dealer merchant account.
According to a report from the Firearm Industry Trade Association, an unprecedented number of Americans are choosing to exercise their fundamental rights to bear firearms.
In recent estimates confirmed by the National Shooting Sports Foundation (NSSF), over 5 million new gun owners joined 100 million pre-existing American gun owners in 2020.
In the same year, the industry contributed $63.49 billion to the U.S. economy.
But despite the billions of dollars generated every year by the guns and ammunition industry, a majority of financial institutions refuse to offer merchant account services and payment processing solutions to the industry because it is seen as high risk.
A firearms retailer merchant looking to secure a gun dealer merchant account to accept payments for firearm sales, ammunition sales and related supplies needs to look beyond traditional financial institutions.
Businesses that fall into this category include:
- Gunsmith shops or stores
- Pawn shops selling firearms
- Firearms retailer and distributors
- Gun resellers
- Gun academies
- Gun shops and gun ranges
- Seller of firearm accessories
- Tactical gear sellers
- Online firearms sales
Why Firearm Dealers Are Seen As High Risk
Financial institutions are not willing to work with gun dealers because the industry is riddled with excessive chargebacks.
An individual who buys a gun is highly likely to raise a dispute over the purchase because firearms are “high ticket” items with an average firearm sale going for at least $300.
Chargebacks are not great for business and can translate into massive financial losses. Banking institutions are unwilling to bear this debt and choose not to work with firearm dealers.
Fraud might be a common occurrence in every business, but the high price of firearms potentially increases the risks of being defrauded. This is another reason why regular merchant account providers turn down the opportunity of partnering with the gun industry.
Additionally, due to gun violence the sales of firearms remain heavily regulated by the U.S. government and require additional insurance underwriting—a task that many traditional merchant account service providers want to avoid.
Moreover, increasing cases of gun crimes have contributed to polarized public opinions about gun dealers that banking companies would prefer not to be associated with, in order to preserve goodwill among the people.
For the few banks and credit card companies willing to do business with gun merchants they either charge high rates for transactions or offer restricted merchant account services.
Generally, it is not ideal to deal with these types of payment processors because they can freeze your account or shut it down permanently without notifying you.
Since a majority of regular financial institutions are unwilling to underwrite firearms retailer merchants and ammunition businesses, these high risk merchants should be looking at securing the services of payment processors who can.
Getting a Gun Dealer Merchant Service Account
Getting a Federal Firearms License is a requirement before submitting a high risk merchant account application.
The next thing to do is to understand rules and regulations regarding sales, transfers and possession of firearms, ammunition and gun accessories.
You should not only keep a keen eye on laws in your state. Federal laws should also be of interest to you.
Ensure that all your financial documents are in order, particularly your credit report which can be a deal breaker when tendering an application.
Research and due diligence is important when it comes to finding a high risk merchant account provider with a proven track record of credibility.
Never settle for a payment processor offering low prices or willing to open a firearms dealer merchant account without asking too many questions.
Consider only companies offering firearms merchant services that have good ratings with the Better Business Bureau and Consumer Affairs.
Checking out reviews from credible sources prove that a high risk merchant account company is secure and reliable. Good reviews instill trust in a brand and give customers confidence to do business with that brand.
Stay away from gun dealer merchant account services with bad reviews. Do not be swayed by promises of going over and beyond to make you comfortable. Negative reviews are red flags meant to tell potential customers to keep off and not reel them in.
It is also very important to find a high risk merchant account provider that understands your firearms business model. An ideal gun friendly credit card processor should be an industry expert with in-house account executives capable of tailoring solutions to what your business actually needs.
The right payment processing company must know the ins and outs of getting gun dealer merchant accounts approved quickly. It must have an extensive and strong relationship with FFL friendly banks and credit card processors.
It is crucial for the firearms merchant account company to provide an array of transaction options for retail, ecommerce, mobile, virtual terminal and recurring billing for your business.
This must be done without unfair terminations, payout freezes and interruptions usually common with Square, Stripe and PayPal.
Summary of What a Gun Dealer Merchant Account Should Offer
- Accept credit, debit, electronic fund transfer, electronic checks and web/mobile payments like Amazon and Apple Pay
- Top of the line wireless terminals and countertop POS system for retail store
- Virtual terminals for allowing phone payments i.e. mail order/telephone order (MOTO)
- Small card readers and mobile processing software that can be connected to smartphones to accept payments on the go
- Anti-fraud packages and chargeback prevention tools like Intelligent Source Detection, a technology that pinpoints the root cause of chargebacks. And the Advanced Fraud Detection Suite (AFDS), a system that sets thresholds and custom filters before payments can be made.
- Online payment gateways for credit card payments on website
- PCI compliance
- Provide integration support in the installation of apps and software to create a seamless business flow and minimize administrative workload.
- Low rates guarantee
- Automatic recurring billing
- Online age verification that confirms buyer’s age before purchase
Conclusion – Accepting Payments with a Gun Dealer Merchant Account
When applying for a gun dealer merchant account, do not settle for overpriced transaction rates. Also avoid payment processors using outdated equipment that criminals can easily hack.
Ensure that you ask questions about payment fees and read contracts carefully, the fees that providers want to keep away from you are usually hidden in lengthy contractual agreements.
Select a high risk payment provider that values a long lasting partnership over making a quick buck. The merchant account provider must be able to provide you a customized blueprint with your business in mind.
Lastly, ask if your merchant account type can be looked at in the future. Find out if there are any legal limitations forced on the gun dealer merchant account either by state or federal laws.