Credit Card Processing, Specialty Businesses

Credit Card Processing for Gun Dealers

by Ben Dwyer

Gun dealers often face different challenges than other businesses, and that’s true when it comes to taking credit cards as well. Since selling firearms is considered a “high risk” business, some credit card processors don’t offer services to gun dealers.

But with guns being a big ticket item, giving customers the option to pay by credit card is important. So how do you find gun-friendly credit card processing?

If you’re a gun dealer, here’s what you need to know about finding the right processor to support your business.

Taking Credit Cards: The Basics

Any business that takes credit cards has to pay a processor to handle transactions. Each transaction has a cost, and that cost is made up of three components: interchange, assessments, and markup.

Interchange and assessments are non-negotiable costs and are paid to the banks that issue credit cards and the credit card brands, respectively. It’s easiest to think of interchange and assessments as the base cost or wholesale cost of processing.

The third component is the processor’s markup, which is where there may be some wiggle room. Your lowest cost option will be the one that lets you pay as close to the wholesale cost as possible.

That’s a quick overview, but if you’re new to processing, be sure to check out our guide to credit card processing for complete details.

What’s different for gun dealers?

The biggest difference for gun dealers is that firearms sales are considered a “high risk” business, so you’ll need a processor that offers high risk merchant accounts. High risk in credit card processing can mean many different things, but it often refers to an industry with a lot of potential for chargebacks or fraud as well as sales of age-restricted items.

Try not to take it personally. Credit card processing companies aren’t trying to single you out because they don’t like guns. Rather, the “high risk” designation is applied to firearms in general, not to your specific business.

Internet Sales

Selling over the internet is another way that business is a little different for gun dealers. It’s legal to buy guns online in the United States, but the gun must be shipped to a dealer with a Federal Firearms License (FFL) and not to the consumer directly. The consumer then gets their firearm from the licensed dealer to whom the firearm was shipped.

This is different than traditional internet sales where the consumer purchases the item and it’s shipped to them. However, from the payment side of things, it functions the same as other transactions. If you’re the dealer that is selling the firearm online, your customer will pay you for the purchase.

If you’re the dealer that is receiving the firearm on behalf of a consumer, you may be able to charge a firearm transfer fee to the customer upon pickup of their firearm.

Note that online firearm sales are considered riskier than in-person sales. As such, fewer companies offer online firearm sales. However, there are still multiple gun-friendly processors that are happy to support online firearm sales. Dealers looking to sell online will need a merchant account with payment processor TSYS or one of its resellers. Other processors don’t permit online sales, even when the business complies with requirements to ship to an FFL dealer.

It’s always best to be upfront with processors rather than trying to fudge the details. Gun sales are legal, and there are processors that are willing and able to support your business.

You can also read about specifics of firearm sales at the Bureau of Alcohol, Tobacco, and Firearms website.

Gun Dealer Selling Accessories Online

Some gun dealers sell accessories or novelty/gift items in addition to firearms. If you plan to sell those items online, you’ll either need a separate merchant account or a processor that supports firearm sales online. Otherwise, you run the risk of having your merchant account closed, as happened to one gun dealer processing with Intuit. Later in this article, we’ll take a closer look at what happened in that situation and how you can avoid that headache.

Intuit Stops Processing Gun Sales – The Full Story

In early summer 2018, the New York Post ran an article alleging that Intuit abruptly stopped supporting credit card sales for gun dealers. The article stressed that some businesses were simply offering online or phone sales for non-gun items, such as coffee mugs and safety classes.

Intuit issued a statement that they did not stop supporting gun sales, but that they’re enforcing a policy of only allowing face-to-face gun sales, as required by their partner banks.

While we’ve written previously about Intuit’s expensive merchant accounts and questionable tactics, this particular situation isn’t necessarily Intuit’s fault. Indeed, it’s no single party’s “fault” so much as a misunderstanding about how processing works and a miscommunication between the business and the processor.

Understanding Merchant Accounts

When you open a merchant account, your business is assigned a “merchant category code” (MCC) that designates what type of business it is. When you receive an MCC associated with firearms, it indicates that you’re, well, selling firearms. In the case of the companies with which Intuit severed ties, the businesses were selling non-firearm items (like coffee mugs) online. However, Intuit’s back-end processing company (First Data, now Fiserv) doesn’t permit online firearm sales.

The argument is that the business wasn’t selling firearms online. But Intuit doesn’t know that. The processor doesn’t know what a business sells in any individual transaction. Rather, they know that it’s a company classed as a firearms dealer that’s accepting online payments.

The way to avoid this issue is to either find a processor that supports online firearms sales, or to have separate merchant accounts: one for in-person firearms transactions and one for online gifts and novelties such as coffee mugs and t-shirts. That way, your merchant accounts will both be set up under the correct guidelines, with accurate risk profiles, and your chances of an issue with your processor are significantly lower.

Yes. Some states, such as Georgia, have laws regarding discrimination against firearms businesses but the laws don’t necessarily apply to processing companies.

Honor Defense, a gun dealer based in Georgia, brought the issue to the forefront of state politics when payment processor Stripe refused to do business with the company. At the end of June 2018, reports that the Georgia Attorney General said – though a spokesperson – that the current laws apply to federally chartered banks, not money transmitters, such as Stripe.

Fortunately, there are many gun-friendly credit card processors. If you need assistance opening a merchant account for your firearms business, we’re happy to help. Fill out a free, no obligation business profile to get started.

Companies to Avoid as a Gun Dealer

In credit card processing, there are a few names that you’ve probably heard of, such as Square, Stripe, and PayPal. These are what the industry refers to as “flat rate aggregators” meaning they don’t issue merchant accounts directly. Instead, they essentially sublet their own merchant accounts; a practice that allows them to get businesses set up quickly, but also usually results in lower risk tolerance.

All three of those companies prohibit firearms. Save yourself the time and aggravation and skip any company that doesn’t explicitly permit firearms. You may think that your business is too small for a big company to notice and that you can simply take cards under the radar. A lot of businesses find out the hard way that credit card processors can and do shut down accounts if the business violates terms.

There are plenty of gun-friendly credit card processors that offer competitive rates. You’ll breathe much easier working with one of those companies from the get-go. When it comes to gun-friendly credit card processing, the best thing to do is seek out companies that explicitly support gun sales rather than fighting with one who doesn’t.

How Do I Find a Gun-Friendly Credit Card Processor?

Finding a processor for a gun shop can be a time-consuming process if you do it yourself. You’ll need to locate processors that can support firearm sales (again, popular companies like Square explicitly prohibit firearm sales) and then request quotes.

Quotes you obtain on your own in the open market are not usually fully-disclosed nor in a consistent format. You’d need to determine the pricing model being used by the company, research how to compare different models, and still be prepared for hidden fees.

Or, you can find a credit card processor right here through CardFellow. We work with several gun-friendly companies that are approved by organizations like the NRA. You don’t have to jump through extra hoops to be able to take credit cards at your gun shop, and we keep your contact info private so you won’t get bombarded with sales calls.

Best of all, you won’t have to spend hours calling processors individually and trying to compare apples and oranges. All of the quotes you’ll receive are fully disclosed (no hidden fees!) Additionally, we utilize the same format for an easy side-by-side cost comparison.

Processors in CardFellow’s marketplace than support gun shops include TSYS, Payment Depot, and others.

What are the benefits of finding a gun-friendly merchant account through CardFellow?

  • Expertise – processors in our marketplace are familiar with gun dealers and can help you at every step of the way.
  • Terms that benefit you – quotes come with CardFellow’s safeguards when you choose a certified quote in our marketplace. You’ll benefit from a lifetime rate lock, no cancellation fees, and ongoing statement monitoring from CardFellow to ensure you’re paying as little as possible for processing.
  • It’s free to use – You read that right: there’s no cost to use CardFellow or our free quote comparison tool. Here’s how we make money.
  • You can invite a quote from any processor you want. Then, our software will show you how it stacks up so you can make an informed decision.

Ready to get started? Fill out our 2 minute sign up form.

Remember, just because firearm sales is considered “high risk” doesn’t mean you don’t have options. Following applicable laws and working with a payment processor that is familiar with gun sales can help you take credit card payments with ease at your gun shop.

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