Payment Processing for Firearms Industry

How to Get a Merchant Account for a Firearms Business. A business dealing in firearms and weapons has its unique set of challenges. Among the many, one of the major issues is securing a merchant account from a payment processing company. It is quite common to see firearm and weapon dealers go through a lengthy application process only to get rejected. The primary reason for repeated rejections is that payment processors see your business as “high risk”. What does that mean? Your business is predisposed to financial risks and could cost the underwriting bank heavy if it faces a loss. Other businesses earn their “high-risk” tag owing to a high chargeback ratio. But with a firearms dealer, there is more to the justification. Here are some reasons for application denials from banks and payment processors.

1. Policy Changes – The firearms industry is regulated by federal laws and is subject to frequent policy changes. The increasing regulatory environment raises business uncertainties. Banks and payment processors also ban businesses that function unethically; they shun businesses that fail to adhere to federal laws concerning gun control.

2. Chargebacks – The likelihood of a chargeback is less in case of a firearm industry, but it cannot be negated. Customers dispute payments for damaged goods, undelivered goods or wrong orders.

3. Fraudulent purchases – The increasing incidents of gun violence across the world have necessitated stricter gun control laws. The purchase of weapons is thus subject to several restrictions. Individuals involved in criminal and unlawful activities try to circumvent official procedures. The easiest way to make firearm purchases is by fraudulent means using stolen cards and identities.

4. Big ticket items – Firearms and their accessories are an expensive purchase. It wouldn’t be wrong to class them as luxury items. The price of a basic, entry-level gun is around $250. A high item cost translates to a bigger monetary loss if there is a chargeback. And, it is obvious customers will dispute expensive purchases.

5. Seasonal market – Sales in the firearms industry are season-governed. Sales usually pickup during the hunting season increasing the transaction volume.

6. Reputation – It is a matter of reputation for many merchant account service providers. They do not want to be associated with a firearms or weapons dealer. They try to stay away from this industry due to its controversies and legal complexities. All said and done, it is next to impossible to sustain a business if it does not have a provision to accept card payments. Thus, if you are in the firearms industry, you need to work with a high-risk payment processor for the best experience.

Getting a Gun Merchant Account Approved

Look for a company that supports firearm and weapon dealings. This includes distributors and wholesalers selling guns, rifles, ammunition, accessories, hunting supplies and protective gear. They should also have experience dealing with high-risk merchants and small businesses and startups. They should also agree to work with businesses dealing in high ticket items and those that have a large turnover.

A valid Federal Firearms License is a must-have when you apply for a merchant account to sell firearms and weapons. You will not be able to accept any credit card payments in your merchant account without it. The FFL won’t be required if you sell only accessories. One can apply for the Federal Firearms License at the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Federal laws concerning the sale and purchase of firearms vary according to the state. It also depends on whether the purchase has been made from a licensed seller or a private unlicensed seller. Discuss the state-specific laws that apply to your weapons business with the merchant account provider.

Since a firearms business is more susceptible to fraud, it is important review the security protocol implemented. Most payment processors use Secure Sockets Layer (SSL). It prevents theft or corruption of data transmitted over a computer network through encryption. Take some time to study your credit history. Underwriters look for a good score when approving applications of a firearms merchant account. If your score looks bad, work with a credit restoration business to improve your credit score. Try to clear all outstanding debts and bills.

Work on building a functional website. State the terms and conditions, privacy policies and refund policies carefully. A refund policy can help reduce the rate of chargebacks. With a refund policy in place, customers will try to contact retailers to verify purchases before they make a chargeback claim. A wider selection of payment options translate to more convenience for your customers. If you operate from a physical location, a traditional card swiping machine is essential. A virtual terminal accepts payments made over the telephone and via mail. Whether you opt for retail or virtual credit card terminal, it should accept major credit cards such as MasterCard, Amex, Visa and Discover. Mobile swipe options allow you to complete payments using your Apple and Android devices. They should also enable Card not present transactions. The merchant account should be compatible with major shopping carts and payment processing gateways. Merchant accounts with multiple underwriting banks are always an advantage to a high risk business. Do cost-benefit analysis before you choose a merchant account provider. Avoid those that charge a startup and application fee. There are many payment processors offering merchant accounts for high risk firearm dealers. Make a careful selection so that you do not regret your decision.