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Home » What to Know About Firearms and FFL Merchant Accounts?

What to Know About Firearms and FFL Merchant Accounts?

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Firearm businesses are legal in the United States of America. The only problem is that such businesses are known to carry out transactions involving firearms –and this is regarded as quite risky. If you happen to be a firearm merchant, you would definitely understand the difficulties of getting access to the firearm merchant accounts.

Most of the credit card processors out there are not known to work with firearm merchants for two major reasons:

  • The sale of firearms tends to be regulated by the federal government. Therefore, it would require extra underwriting by the respective credit card processors.
  • As firearms serve to be a major political issue, most of the merchant service providers, along with the respective sponsor banks, decide to take the anti-Second Amendment part into consideration. As such, the service providers or processors tend to refuse to serve fully firearms-related businesses that might be legitimate.

Members of the firearm industry are well aware of how difficult it can be to secure gun-friendly payment processing. Even after the higher volumes of FFL dealers out there that are currently ongoing in the overall operations, most of the financial institutions out there are not willing to work with businesses that might be at much higher risks.

If you wish to start selling firearms in the country –either in person or online, you would be required to search for a reliable payment processor that helps in setting you up with a legitimate merchant account.

Firearms Industry is Regarded as Risky by the Banks

Banks are mostly reluctant when it comes to getting involved with credit card processing of high-risk procedures –including firearms. While the firearms industry might be a significant part of the economy in the United States of America, most financial institutions or banks are not known to work with them.

These institutions presume that such industries or businesses might impose both reputational as well as financial risks while costing them money due to multiple frauds, regulatory changes, and reputational risks.

Legal Liability: Banks are not known to favor the process of involving themselves in industries or businesses that involve higher volumes of verification and licensing. As it is quite common for legal disputes to happen in such scenarios, most industries that are regulated by the ATF are regarded as those imposing higher risks.

Frauds Related to Merchant Services: The regulations applying to the FFL dealers tend to be quite simple. However, this fact is not always known to stop the occurrences of illegal transactions. Whether the fraud is known to occur from the side of the customers or the dealers, most banks or financial institutions are still not willing to take up the involved risks.

Negative Reputation:

Whatever might be the case, the firearms industry in the country tends to feature a negative media reputation. This fact makes it more difficult for carrying out the given business. At the same time, most financial institutions out there are simply not interested in ensuring association with the industry that has been perceived as potentially dangerous or unreliable.

In comparison to other businesses, FFL dealers are not known to experience higher volumes of chargebacks. However, in any case, if any chargeback does occur, these tend to be extremely high in the overall values.

This is known to impose a unique kind of risk to both the financial institution as well as the dealer. Even when the respective FFL dealers might consider taking proper steps to mitigate the overall risks, they might still end up being denied the standard access to a high-risk merchant account.

Tips to Get Gun-Friendly Payment Processing

In case the standard institutions out there are not helping you in starting your firearms business, then you should aim at reaching out to some high-risk payment processors dealing in firearms. Most of the alternative financial institutions are not known to offer the high-risk merchant services of credit card processing to businesses involving higher risks. In some cases, the businesses can get approval from such processors initially.

However, such approvals get suspended later on due to the presence of latent underwriting processes. Due to this reason, some merchants tend to process for several months before they are interrupted randomly.

On the other hand, when you avail services from high-risk payment processors, they can help you in coming across some reliable merchant accounts featuring a payment gateway that is PCI-compliant. When you are the dealer, you can look forward to offering your customers a reliable payment method with the help of a processor that is fully prepared when it comes to handling a typical firearms transaction.

Whether you happen to be a reputed FFL dealer or a new entrant to the firearms industry, you are required to follow the standard series of steps as per the guidelines:

  • Try to acquire the Federal Firearms License through some reliable provider
  • Keep on following the regulations that are required for starting a business in the respective state
  • Apply for the respective firearms merchant account through the online mode

You will be asked to provide the license as well as proof of your firearms business when you are applying for the same. On the basis of overall attentiveness as well as bank stipulations, the entire application process can be completed within a span of a few days.

Once you have been successful at securing the respective firearms merchant account, you can start accepting the desired payments while selling guns online as per the overall demand. For ensuring the same, you are required to set up a dedicated website, get in-depth knowledge of the particular marketplace, or even consider joining a coalition of firearms dealers. You can ensure it all once you are aware of the fact that your payments are going to be secure.