Accepting credit cards in your gun store?
Oh boy do we have a problem. The vast majority of payment processors will flat out reject your business.
Apply for merchant services with a traditional bank and you’ll get rejected. Want to try PayPal? Nope. Square? Shutting you down even before you apply.
Why?
The firearms industry is known as “high-risk” – and that comes with a whole host of headaches when it comes to getting approved.
But don’t worry…
If you work with the right payment processor, you can get approved quickly and start accepting payments worry-free with no fear of future account terminations. Specialized high-risk processors like 2Accept can provide reliable merchant solutions for high-risk gun retailers that understand the unique nature of firearms payment processing solutions.
What You’ll Learn:
- Why Firearms Businesses Are Considered High-Risk
- The Challenges Gun Retailers Face With Payment Processing
- How To Pick The Best Payment Processor For Your Gun Store
- What You Need To Apply For Merchant Services
Why Are Firearms Businesses Considered High-Risk?
OK, let’s cut to the chase.
Payment processors consider firearms businesses “high risk” for a few reasons. The “fault” here isn’t personal. It’s a matter of perceived liability and regulatory complexity.
The first problem is regulation. Federal Firearms License (FFL) holders are regulated by the ATF, and you need to follow stringent rules. State laws can also vary wildly, with different age requirements depending on the product being sold. Make one tiny error, and the ATF and state agencies can come crashing down on you like a ton of bricks.
The second issue is reputation.
Banks and payment processors are spooked by negative press. The firearms industry is regularly the subject of national news stories… and not in a good way. To avoid getting linked with gun sales, many financial institutions won’t work with you no matter how legitimate your business is.
Add in the fact that 48% of households in the United States own firearms, and you’ve got a huge market and equally large volumes of transactions.
Hold on, there’s more.
Chargeback rates in the firearms industry are higher than in many other fields. Firearms are expensive. Rifles and handguns can run anywhere from $500 to $2,500 a piece. Chargebacks on that kind of money? Ouch. Processors and banks are more likely to shut your account down.
Fraud is also a major concern. Criminals buy stolen credit cards to purchase firearms. Identity theft is a major problem. When these things happen, the onus (and the fees) are left on the payment processor.
The Challenges Gun Retailers Face With Payment Processing
Merchant account approval is just the first battle.
Even after you’ve got your merchant account set up, running a firearms business has a unique set of challenges.
Risk Of Account Terminations With No Warning
Picture this.
You’re processing credit card payments just fine. Sales are good. Customers are happy. Then, out of the blue, your account gets frozen. Terminated even. Poof! Overnight your business can go from black to red.
Why? Traditional payment processors don’t “get” the firearms industry. When they see transaction patterns they don’t understand or an underwriter has a change of heart, you can get the ax.
It’s infuriating. It’s disruptive. It can put you out of business overnight.
Higher Processing Fees
The prices you pay to process credit cards are going to be higher.
It’s as simple as that.
A typical retail store pays 1.5% to 2.5% per transaction. Guns merchants see rates of 3% and up. Many payment processors also require reserves to be kept in cash for chargebacks.
Is it fair? No. Will it change? No.
Fewer Payment Gateway Options
Most payment gateways don’t allow firearms businesses to apply. PayPal? Nope. Shopify Payments? Not a chance. Square will shut you down even before you apply.
You’re forced to work with specialized providers.
Compliance Requirements
Let’s not forget about federal and state compliance regulations. You’re going to need to verify ages, ship to FFL holders for online sales, keep detailed records, and more.
**And your payment processor needs to know and understand this. **
If they don’t, they can reject your application or shut down your account down if you’re caught.
How To Choose The Right Payment Processor For Gun Retailers
Look, not every high-risk merchant account provider is the same.
Some get firearms. Some just claim to be able to help. The difference is important.
Experience In The Firearms Industry
Do they understand FFL requirements? Have they worked with other gun stores before?
Experience is everything. Processors that specialize in firearms have learned how to properly structure an account to minimize risk. They know what things trigger red flags from banks and underwriters.
Transparent Pricing
High-risk doesn’t mean you should be taken advantage of.
Look for processors with upfront, transparent pricing. Don’t accept hidden fees or surprise charges.
Look for someone who gives you an up-front, detailed breakdown of:
- Per-transaction fees
- Monthly account fees
- Chargeback fees
- Reserve requirements
If they won’t show you this up front, run for the hills.
Fast Approval Times
2024 is already a great year for firearm sales in the United States. Approximately 16.1 million firearms were sold last year. There is a huge market here. And you want to get your piece of the pie as soon as possible.
Look for someone who can approve your application in 24-72 hours.
Dedicated Account Management
When things go wrong (because they will), you need someone that understands your business.
The best high-risk firearms payment processors assign a dedicated account manager to every account. These folks know the firearms industry inside and out.
Chargeback Management Tools
Chargebacks are an unfortunate reality of high-risk payment processing.
But you can limit them with the right tools. Look for a processor who offers:
- Real-time fraud screening
- Address verification services (AVS)
- 3D Secure authentication
- Chargeback alert systems
Chargebacks cost thousands in fees. Manage them and you can save thousands.
What You Need To Apply
So, let’s say you’re ready to apply for a merchant account. Here’s what you’ll need.
The first thing is a Federal Firearms License. If you don’t have an FFL, don’t even bother applying. Full stop.
On top of that most processors will want:
Business documentation: Articles of incorporation, business license, tax ID number, etc.
Processing history: Bank statements with evidence of sales volume. If you’ve processed before, show past bank statements.
Website information: If you sell online, your processor will want to see your website. They’ll check for refunds policy, terms, age verification, and more.
Personal information: You’ll have to provide personal information and likely sign a personal guarantee. This is standard for high-risk accounts.
The better prepared you are, the quicker approval will go.
Mistakes To Avoid
OK, here’s what NOT to do.
Mistake #1: Lying on your application.
Some people try to lie on their applications to keep their status as firearms sellers hidden. Don’t do it. They’ll find out. And your account will be shut down.
Mistake #2: Picking the cheapest processor.
Sometimes you get what you pay for. The cheapest high-risk processor may come back to bite you with hidden fees and terrible service.
Mistake #3: Ignoring compliance.
Federal and state regulations are not suggestions. Ignore them, and you risk more than your merchant account. You can risk your entire business.
Mistake #4: Not having backup processing.
Nothing ever goes 100% smooth. Even with the right processor, you need a plan B. Smart gun retailers have backup options ready to go.
Wrapping It Up
Gun payment processing solutions don’t have to be a headache.
Granted, the firearms industry is high risk. Yes, you’ll pay more than you would with a traditional retailer. And yes, it takes work to find the right processor.
But here’s the thing…
Once you’ve got the right firearms friendly payment processor in place, your job is easy. You can focus on running your business and helping customers without worrying about your processor.
It’s all about finding a processor who specializes in firearms, has transparent pricing, offers fast approvals, and understand the compliance issues you face as a firearms business.
Do that, and you won’t have to deal with the headaches that face gun retailers when it comes to processing payments.
Remember, your payment processing partner should feel like an extension of your own business, not an obstacle. Choose wisely and you’re well on your way to gun business success.
