The ability to process credit cards is crucial for any business, as customers increasingly prefer that method of payment. Unfortunately, gun shop owners frequently face more challenges than other merchants, and that includes accepting credit cards. Because firearms dealers are considered “high risk,” many credit card processing companies don’t offer services to these businesses.
According to a recent Small Arms Survey, there are 393 million firearms in the United States, the most per capita in the world, with about 40% of American civilians owning a gun or living with someone who does. The U.S. gun and ammunition stores market is worth around $12 billion, and firearms sales dramatically increased in early 2020 in the wake of the coronavirus.
With 80% of consumers favoring card payments over cash, and the COVID-19 pandemic only making non-contact, paperless transactions more prevalent, it’s evident that businesses need to be able to process credit and debit cards. This is particularly important for gun shop owners because firearms are a big-ticket item, and people are more likely to use a credit card than cash for a larger purchase.
Clearly, selling guns is a profitable business. However, for a variety of reasons, many traditional financial institutions won’t provide merchant services or payment processing for this sizable but marginalized industry. That’s why firearms dealers need to find alternative, gun-friendly payment solutions that give their customers the option to pay with credit cards and can help grow their business.
Credit card processing
A payment processing company facilitates transactions by serving as a back-end intermediary between the customer and the merchant – or, more accurately, between the customer’s bank, where the payment comes from, and the merchant’s bank, where it goes.
Processors can enable other methods of payment – including by contactless mobile wallet, voice or text, ACH and check – but credit and debit card payments are the most common.
All businesses that take credit cards have to pay a processor to handle the transactions. The cost of every transaction comprises interchange, assessments and markup fees. While interchange and assessments are fixed, base fees that are paid to the credit card networks and banks, there is some flexibility with the markup, and most businesses can shop around to choose the best price available.
A merchant that isn’t equipped to handle credit and debit card processing runs the risk of falling behind and having customers shop elsewhere. For most, getting a credit card processor is simple and straightforward, however for those labeled high-risk, such as gun shops, CBD stores and Native American businesses, payment solutions providers aren’t so easy to find.
Why firearms are a special case
Because of legal and regulatory issues, chargebacks and a more complex sales process, gun dealers are considered “high-risk” businesses. In credit card processing, high risk can mean a number of different things. Typically, it refers to an industry with a higher propensity for chargebacks – returning of money to a payer, usually in a credit card transaction – and fraud, as well as sales of age-restricted or other legally controlled items.
Indeed, just because a business is labeled high risk doesn’t mean it is dodgy, dishonest or undeserving of basic payment solutions options. These legal businesses sell legitimate products – think of hemp-derived CBD and vape stores, tribal businesses, pawn shops, ammunition suppliers and others – and they need a credit card processor that offers high-risk merchant accounts.
The right to bear arms is enshrined in the constitution, but U.S. gun laws differ considerably between states. Most firearms legislation is enacted at the state level and is independent of federal statutes, resulting in a wide variation of gun laws and confusion for sellers and buyers alike.
Besides background checks, minimum age restrictions, training requirements and other legalities, internet sales are another way business is more challenging for firearms dealers. Customers can legally buy guns online, but the weapon must be shipped to a dealer with a Federal Firearms License, rather than directly to the buyer. In terms of payment, though, the purchase is essentially the same as any other transaction.
Finding the right processor
It can be difficult and frustrating to try to find a credit card processor for your gun shop. While mobile and online payment solutions have become commonplace for most businesses, many of these popular credit card processors are not providing such services to firearms dealers, even though some previously did so.
Flat rate aggregators like Square, Stripe and PayPal, which can get small businesses up and running quickly but typically don’t process as much volume and have lower risk tolerance, prohibit firearms. Intuit GoPayment only permits face-to-face gun sales. All of this has produced processing complications, transaction holds and problems accepting payments at gun shows and over the internet, where mobile and online solutions are vital. In some cases, firearms dealers have even had their merchant accounts suddenly shut down.
Obviously, it’s important that you select a gun-friendly credit card processor that explicitly allows firearms sales. But you should also look for one that has the experience, knowledge and commitment to support high-risk business generally, as well as fair contracts, transparent fees and the ability to fully integrate with your current system.
FLEX Payment Solutions understands the firearms industry, including the laws, regulations and unique transactional facets of the space. We deliver fast, convenient credit card processing for any legal enterprise – including CBD stores and, in particular, high-volume or chain gun shops. Offering 100% compliance and unparalleled customer service, we can streamline your payment processing, reduce costs and not only help you continue operating, but also actually grow your firearms business.
