Since the earliest days of the United States, firearms have been a topic of interest, albeit a topic of frequent debate. Efficacious for personal protection and recreational enjoyment as well as for physical violence and the non-physical threat of violence, both internet and physical retailers are subject to a higher degree of scrutiny than some other business types.
Firearms sales and ammunition sales are listed as a high-risk business category by the FDIC. Defined as an industry that has been associated with an above-average number of transactions occurring “when the consumer does not have a familiarity with the merchant, or when the quality of the goods and services being sold is uncertain.”1 The United States Department of Justice’s Operation Choke Point, initiated in 2013, has increased the degree to which banks that do business with high-risk verticals are investigated by the DOJ. Consequently, some financial institutions are more cautious and less willing to do business with the FDIC’s high-risk business categories.
Fortunately, federal regulations do not bar you from obtaining a merchant account. This is excellent news, since such a service is essential to your ability to accept credit cards and debit cards. In our world of digital transactions, it is vital that you not only secure an account, but one backed by a reputable company known for its excellent customer service and fair rates with no hidden fees. Even if you’ve been declined by the major merchant service providers, businesses such as E-Commerce 4 IM, who specialize in high-risk businesses and who are familiar with your industry, have the experience and connections you need to sell your products online.
Credit card processing companies consider several factors when evaluating firearms and ammunition retailers. These include the length of time your company has been in business, your past credit history (including your business’ credit score), the amount of negative feedback your company has received, your sales and marketing practices, and your business’ overall financial health.
Financially healthy companies are always more likely to receive merchant accounts. A few ways you can contribute to the overall health of your business include:
Know your state and local policies and perform all required background checks. Even if these checks are not required for your venue, such as gun shows and private sales, you may want to consider voluntarily conducting them. By not following these checks you may be repeatedly declined for a merchant account.
Maxing out your available credit hurts your credit score. This is one of the key factors credit card processing companies consider when assessing the real risk your business presents. Ideally, you should only use 10-20% of your available credit and keep as much of the balance as possible on a single card.
Timely bill payment also goes a long way toward developing a positive credit score. This helps convince payment gateways that you are a responsible business.
High-risk businesses are known for excessive chargebacks. Minimizing the number of contested credit card payments and bounced cards is essential.
When you appear to promise things you cannot deliver, customers often become angry or disillusioned with the product. No matter how many other beneficial results they may have obtained, they may demand a refund or charge back their card. This is possible if they did not achieve the same result you promised.
The TMF (Terminated Merchant File) list is a database created to identify merchants who have been had their credit card processing accounts flagged for illicit activity, including money laundering, excessive chargebacks, fraud, identity theft, or illegal transactions. It is also accessed by Visa and American Express, so being on this list is the equivalent of being on a shared blacklist. Be aware that this list is circulated among most major credit card companies. If you are not already on this list, keep your business dealings honest and avoid high chargebacks. If you do end up on the list, contact your merchant services provider to find out why. Often, they can help you to fix your reputation if you are on the list erroneously. E-Commerce4IM has a great deal of experience in guiding Firearms Sales businesses so they stay off the TMF list.
Finally, when searching for a credit card processor, you should not only consider the state of your own business, but the state of your potential service provider’s. A good provider will never charge you hidden fees. They will work with you to get you started, keep you supported, and help you grow. If you’re looking for such a company, we invite you to check out E-Commerce 4 IM to see how we can help you acquire a Firearms Sales Merchant Account. With many years of experience with the “high-risk” credit card processing industry we are qualified to help you.
1 Federal Deposit Insurance Corporation. “Managing Risks in Third-Party Payment Processor Relationships.” http://www.fdic.gov/regulations/examinations/supervisory/insights/sisum11/managing.html