How to Manage Payments for Regulated Firearms vs. Non-Regulated Accessories

Because of the complex nature of the sector, payment processing for firearms dealers is not straightforward. 

For instance, what do you do if you want to assist customers in paying for both firearms that are subject to federal and state regulations, and peripherals that are not? In the following post, we will help you unravel the intricacies.

Payments for regulated firearms

Selling pistols, rifles, and other weapons results in heightened reputational, legal, and regulatory concerns. As a result, traditional lenders generally choose not to partner with businesses that make these types of sales. 

Consequently, you will need to obtain a high-risk merchant account that you use, at the very least, to complete the sales of federally and state-regulated firearms items.

Federal firearm licensees (FFLs) looking to sell rifles, pistols, and other models of regulated firearms should choose only a high-risk provider that specializes in the gun industry. A company possessing this expertise should offer specialized services that can assist you with regulatory compliance. 

This will most likely include transaction-supported reporting, as well as the peace of mind that comes with knowing that you are operating in compliance with the terms of the Gun Control Act of 1968.

In addition to adhering to federal and state legislation, your high-risk payment provider is also vital in other crucial areas. These include separation of orders and shipments, merchant category codes, additional documentation, and payment methods.

Following the law is just the beginning of what your provider can assist you in doing. Your high-risk merchant account provider can also be a valuable ally in giving you what you need to separate your orders and shipments. This is necessary because regulated items, such as firearms, must be processed distinctly from all unregulated accessories. Furthermore, the regulated merchandise must be shipped not directly to the customer ,but to a licensed FFL dealer who conducts a mandatory background check before the goods can be transferred to the client.

There are some states that require that your payment processor assign your business a specific merchant category code (MCC), often MCC5723, that identifies you as a firearms dealer. It does not, however, record data pertaining to specific items purchased.

Your firearms-focused payment processor might require you to submit additional documentation. For instance, you might have to demonstrate that you are adhering to certain security protocols, be mandated to provide proof of identity, or be required to produce your FFL.

Finally, your provider will furnish you with everything that you need to take firearms-related payments from customers using a host of methods. Available options should include cash, checks, debit and credit cards, money orders, bank ACH transfers, and even alternative financing. 

In a sector where legal compliance and data security are critical, your specialized merchant account provider will possess a deep understanding of the current security landscape and industry-specific threat vectors. 

They will also offer the dedicated customer service and specialized software needed to protect both you and your clients from the consequences of a data breach.

Non-regulated items

While a large share of your profits comes from selling pistols and rifles, a substantial part of your steady income also comes from accessories, clothing, cleaning supplies, and other general merchandise. 

These additional items play a key role in supporting the overall success of your business. In transactions that only involve these peripherals, payment processing can usually be taken care of via a standard merchant account. 

When you use one, you will incur significantly reduced fees due to the lowered perceived risk. Furthermore, the merchandise can be directly shipped to the customer, with no need for an FFL transfer or background check.

The complexity comes when you need to handle mixed orders that combine regulated with unregulated products. When this happens, your online checkout system must be sophisticated enough to make the required separations.

Specifically, your checkout software must charge separate fees. Regulated items will incur additional charges and will need to be sent to the FFL for extra regulatory scrutiny. Unregulated goods, on the other hand, will cost less and can be forwarded directly to the customer’s address.

As a firearms dealer, you likely want to offer a wide selection of items to your customers that go beyond the weapons themselves. 

With the right payment processing for firearms dealers, and an ongoing understanding of your customers’ needs and the regulatory and security landscape, you can make this goal a reality.