Operating a firearms business? You’re well aware that payment processing is not the straightforward, plug-and-play process it should be.
The majority of firearms dealers learn pretty quickly that the Square or Stripe simply won’t accept their business. 100% licensed and compliant? That won’t matter. PayPal, Venmo, and other third party processors will reject your application with lightning speed.
Here’s the problem:
The firearms industry has created $91.65 billion in economic activity just in 2024. That’s a lot of money. And yet, payment processing remains one of the biggest issues gun dealers, gunsmiths, and ammunition retailers face.
The existence of specialized firearms merchant accounts is precisely because of this.
Here’s what you need to know:
- What a firearms merchant account is and why you need one
- Why the firearms industry is considered high risk
- The top challenges for firearms businesses
- Features to look for in a merchant account provider
What Is A Firearms Merchant Account?
A firearms merchant account is a type of payment processing account specifically designed for businesses that deal in firearms, ammunition, and related accessories.
It’s your pathway to accepting credit card and debit card payments from customers. Without one, you’re stuck running a cash-only business in an era where consumers are demanding the ability to pay with plastic.
However, your options here are severely limited…
The same merchant accounts that process payments for your average coffee shop, tattoo parlor, and restaurateur just won’t do the trick for you. You’re going to need a high-risk merchant account from a provider who specializes in high risk merchants in the firearms industry. Best Firearms Merchant Account should provide you with industry specific support, lower rates, and more importantly, the best will never shut you down due to the products you sell.
Firearms merchant accounts are used for all transactions: from in-store credit card swipes, chip, and dip to eCommerce sales via your payment gateway.
They are built with all the necessary safeguards to process transactions that meet specific compliance standards and regulatory needs. That includes background checks, record keeping, shipping, documentation, taxes, and more.
Why Are Firearms Merchant Accounts Considered High-Risk?
Let me explain:
Financial institutions like banks and payment processors categorize firearms businesses as high-risk for several reasons, and it’s got nothing to do with the legitimacy of your business and everything to do with how they perceive potential liability.
Legal and Regulatory Environment
The firearms industry is one of the most regulated industries in the US. Not only do you have to have a Federal Firearms License (FFL) in order to legally operate, but state laws change and can be extremely stringent.
Some states have tight gun laws while others are more lenient. State-by-state regulations create a patchwork that processors don’t want to have to manage.
Potential violations become their problem and they won’t touch you.
Political Sensitivity
Here’s something that you probably don’t see coming…
Guns are a political issue, and payment processors are very afraid of coming under political attack themselves. They fear a backlash from customers and politicians that disapprove of gun sales.
The solution for many of them is not to do business with firearms companies.
Chargeback and Fraud Concerns
Fraud is a concern for most high-risk payment processors. When customers use stolen credit cards or fraudulent methods to make a purchase, the charge is later reversed.
These chargebacks come back on you. The fallout of firearms-related fraud is more likely to be greater than fraud in other industries so processors are extremely risk-averse.
Challenges Facing Firearms Merchants
If you own a firearms merchant, what keeps you awake at night?
You guessed it – payment processing. Firearms dealerships face a number of similar challenges when it comes to their payment processing, such as unexpected shutdowns, difficulties with approval, and sky-high fees.
Rejection From Standard Processors
Gun store owners tend to try mainstream processors first. Square or Stripe look like an easy route since they are used by everyone else. You get your application in and it gets declined.
Or worse…you get accepted initially and start doing business. A few weeks or months later, you wake up one day to find your account frozen with no warning and your business stuck in limbo.
Running a Cash-Only Business
Operating a gun business with a cash-only system is a recipe for failure. In 2024? That’s a major disadvantage.
More and more consumers expect to be able to pay with their debit and credit cards. Not only that, but most firearms purchases are high ticket. We’re talking hundreds and thousands of dollars in some cases. Very few people want to pay that amount of money in cash.
If you can’t accept payment cards, you will lose customers.
Compliance Issues
And when you do find a firearms merchant account, you will be held to a higher standard. Processors will want to verify your FFL, ensure you have the proper disclaimers and age verifications on your website, and all documentation that firearms only ship to other FFLs.
Key Features To Look For
If you’ve never worked with a firearms merchant account before, here’s what to look for…
Industry Specialization
You want a processor who has extensive experience in the firearms business. They need to understand FFL licenses, know what it takes to get your application approved, and be able to work with all of the unique challenges and needs associated with this industry. Generic high-risk processors will not be suitable for your needs.
Reasonable Fees
Just because it’s high risk doesn’t mean it has to be outrageous fees. Look for quality providers that offer a fair rate without hidden costs or surprise reserve accounts.
Uptime
Your payments processing has to be there when you need it. The firearms industry directly employed 383,292 individuals in the United States during 2024. All of those companies need a service that won’t be going down for maintenance when you need it the most.
Fraud Prevention
Quality firearms merchant accounts come with robust chargeback prevention and fraud detection tools. This means things like real-time fraud screening, customer verification programs, and chargeback alerts to help you keep on top of things.
Payment Types
You should be able to take credit cards, debit cards, and ACH payments. Other types of processors offer e-check processing and mobile options.
Approval and Setup Process
The application process is similar to other high risk merchant accounts.
Firearms merchant accounts are scrutinized more heavily during the application process. You will be asked for your Federal Firearms License, your business license, banking statements, any previous processing history if available, and more to verify that you are in compliance with firearms regulation.
After a successful review from their underwriting team who are familiar with this type of commerce, you will then set up your payment gateway and integrate that with your website or POS system.
Compliance Requirements
Once approved, there are things that you have to stay compliant with to keep your account in good standing.
- Valid, up-to-date, and renewed FFL
- Verification of customer age for all sales
- Shipping only to other FFLs for firearms
- Record keeping of all transactions
- All federal and state firearms laws/regulations
Cost of a Firearms Merchant Account
Here’s what you can expect to pay for a firearms merchant account.
Firearms merchant accounts are, naturally, more expensive than standard merchant accounts.
Expect to pay more in processing costs (usually 3-5% per transaction), setup fees, monthly account maintenance fees, and possibly a rolling reserve.
These are all due to the added risk that processors are taking on by accepting your business. However, don’t let that scare you off – quality companies offer clear pricing without hidden costs.
Final Thoughts
Firearms merchant accounts are not optional add-ons for gun businesses. In an industry that generated $91.6 billion in economic activity last year alone, effective payment processing is the difference between a successful business and one that scrapes by.
The challenges that you face are real. The convoluted regulatory and legal landscape, the political pressure, and the high-risk designation all make the process of finding an actual payment processing solution even more arduous than the typical application process.
However, this is also why specialized providers are in business.
There are companies out there who understand your needs, and see firearms businesses as a worthwhile investment. They offer stable, compliant processing and are prepared to stick by you without the interruptions and unreasonable fees that plague most gun dealers’ relationships with their payment processing provider.
The key is doing the research and finding one that also has a long-term vision for your success.
