Firearms Merchant Accounts (FFL)

Although the firearms industry remains a thriving one, with nearly one-third of US households owning at least one gun, there exist certain challenges facing business owners in the process of obtaining a firearms merchant account. The greatest hurdle is the fact that financial institutions which offer payment card processing classify businesses that sell firearms or that deal in related products and services as “high risk.” This means that many credit card processors won’t offer merchant accounts to firearm-related businesses at all, and of those that do, most will impose high fees and account holds that disrupt a business’s income flow.

Why Are Merchant Accounts for Firearms Considered High Risk?

The factors that cause a certain industry or type of business to be labeled “high risk” are varied, but ultimately they come down to unpredictability and the risk of chargebacks. As reliably profitable as the gun industry is, certain elements of it are less constant, which makes financial institutions nervous. Firearm sales are regulated under both federal law and a patchwork of state legislation, any and all of which threaten to change every election year. When the laws concerning gun retailers are so unstable, it’s easy to see why even the most gun-friendly merchant account providers might hesitate to offer firearms merchant accounts. And of course, not all banks are gun-friendly, or wish to be viewed as such, because firearms are a controversial political issue.

Risk of Chargebacks in Firearm Businesses

The risk of chargebacks is, if anything, an even greater reason for the hesitation with which many payment card processors regard the firearms industry. A chargeback occurs when a cardholder disputes a charge that appears on their billing statement; the reasons for this can include fraud, the customer’s failure to recognize a charge, dissatisfaction with the product or service received, or what merchant account providers refer to as “friendly fraud” – when the cardholder knowingly initiates a chargeback on a legitimate purchase. Firearm sellers are more vulnerable than usual to both traditional fraud and “friendly fraud” – though for different reasons. There are regulations in place at both the state and local level restricting certain parties (such as persons with felony convictions and those with protective orders against them for domestic abuse) from purchasing firearms. For such a person attempting to buy a gun illegally, making the purchase from an online firearm retailer using stolen credit card information is an attractive option. The increased risk of so-called “friendly fraud” exists for a different reason: namely, that guns are expensive. A single firearm purchase can easily come to several hundred dollars or more. Whether a cardholder reaches the end of the month and discovers that they have less money than they expected, or a consumer deliberately sets out to try to cheat the merchant and get something for nothing, firearm retailers share the same risk of “friendly fraud” as any seller of large ticket items.

Not all chargebacks are the result of fraud by any means, and while firearms merchants are more vulnerable to chargebacks than the average business, there are steps that a firearm retailer can take to minimize chargebacks initiated by confused or unhappy customers. You should make sure that the business description that shows up on your customers’ billing statements is as clear and unambiguous as possible; many chargebacks are initiated simply because a cardholder doesn’t recognize a transaction on their statement. The other simple step you can take to reduce chargebacks is to have a fair and easy-to-find return and refund policy. Many firearm collectors and buyers are very particular about the purchases they make, and if an item arrives in a condition they find unsatisfactory, they will probably want their money back. Even though refunds eat into your business’s profits, they are not as damaging to your business as chargebacks – too many chargebacks might even result in the payment processing company terminating your merchant account, after which you will find it much more difficult to open another account with a new provider. It’s smarter to prevent chargebacks from unhappy customers by offering readily available contact information, excellent customer support, and a generous return policy.

How Can I Find an Online Firearms Merchant Account Provider?

There are some payment card processing companies that specialize in working with merchants in “high risk” industries, including firearm retailers and related businesses. Even among these merchant account providers, there are better and worse choices, and finding the best fit for your individual business’s needs will save you money and headaches in the long run. While the per-transaction fees and monthly rates associated with a merchant account are an important factor in the decision-making process, they are not the only points to consider by any means when comparing merchant account providers. Will the payment processing company place a hold on some of your money to act as a reserve fund against chargebacks? This is a fairly common practice, but it can complicate bookkeeping when you don’t have access to a chunk of your business’s profits.

We Can Help you Accept Credit Cards for Your Firearms Business

Durango Merchant Services can furnish you with the means to accept credit and debit transactions across whatever platforms your business requires – whether that includes standard point-of-sale terminals for your brick-and-mortar storefront, mobile payment options for making sales at gun shows, an online payment gateway for your ecommerce sales, or a virtual terminal for making sales by phone. Because the latter two types of sales involve card-not-present transactions, they are more vulnerable to fraud, and as such your merchant account provider should be able to offer the best available fraud protection services with multiple forms of authentication. In addition, your merchant account provider should provide excellent technical support at any hour that your customers might make a purchase, because if a technical problem prevents you from accepting transactions, those lost sales hurt your profits. This is doubly true for ecommerce transactions for firearms sales, in which customers don’t have the option of paying in cash.

Armed with the knowledge of exactly what your business needs from a firearms merchant account, you can speak with representatives from Durango Merchant Services to find out who can best meet your needs with the most reasonable rates. Finding an online firearms merchant account provider is the work of a few seconds’ web search, but finding the best provider for your business finding a company that offers favorable terms, has integrity and experience.

Accept Credit Card Payments at Your Firearms Shop

Obtaining a firearms merchant account is a vital step for new gun retailers or for existing business owners looking to expand their business into online sales, but there are many potential missteps awaiting unwary merchants. Making the wrong choice in merchant account providers, or failing to take simple but critical steps in customer service, can not only cost you heavily in chargeback fees, but could also result in losing your merchant account (and therefore the ability to accept credit and debit transactions at all). If few financial institutions are willing to work with businesses in high risk industries, even fewer are willing to take a chance on a merchant who has had an account terminated in the past, particularly for excessive chargebacks. The right choice of firearms merchant account provider can help you avoid that problem entirely, enabling your business to grow and enjoy the success of this highly profitable industry.