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Lighting Your Guns, Weapons dealing and Firearms Business with Merchant Services


Any business involves some type of risk coupled with it. However, in the case of guns, weapons, and firearms the rate of risk is severe. As these products have high chances of being misused, the business houses dealing with these are under constant attention of governments. Whenever there is some incident like school-shoot outs, there is a huge cry from social service organizations to ban these products altogether. Especially when some instant action results in asset freezing, cut in credit lines, etc. banks and financial institutions turn away from these businesses.

The businesses which deal with weapons, guns, and firearms always face the challenge of inventory maintenance. Maintaining too much inventory would prove to be costly considering the huge value of the locked-up goods. But whenever there is ammunition shortage, there is a sudden, spur of unpredictable demand for the weapons. Whenever there is a continuous shortage of much-demanded weapon models, the experienced firearm users quit the market.

Consequently, the market becomes crowded with new users who are not mature enough in using the arms. This creates a whole lot of social-legal problems. Widespread business bans compel bankers to classify these businesses as high-risk profile clients.

Besides, the weapons industry always has a problem in the demand forecast. The years after 2010 has been highly unstable for the weapons industry as a whole. The industry still has only a buyer’s market. Hence the weapons dealing businesses rely highly on weapon manufacturers for supportive action like MAP pricing. The margins in this industry are very low. That is why the weapons dealers prefer to offer packages rather than cash discounts.

Online Merchants:

Plastic money has become very popular. From the buyers’ perspective, they find it convenient to make card payments. Sellers find it easier to sell goods online, where the buyers simple swipe their card to make payments. Many of the weapon dealers and firearms merchants are also showing interest in online merchant accounts. However, it is not simple for these business houses to open one such account.

Denied/Shutoff/Closed by Other Credit Card Processors like First Data, PayPal, Square, Stripe:

To understand the basic difficulty of why these businesses find it tough to open a merchant account, one has to understand the process in detail. Basically, only when a business has this type of account it can accept credit and debit card payments. Nowadays these types of cards are widely used in E-commerce and websites which sell goods online

To open a merchant banking account, the following options are involved:

  1. The business has to enter into an agreement with the bank that has a processing relationship with Visa/Mastercard/Discover/Amex. The business can also enter into an agreement with the agent of such bank. The bank opens a merchant account and the business can start accepting card payments.

  2. When the online merchants feel that the business is risky, they ask the business to get the job done with the help of Multiple underwriting banks. When the underwriters give a clearance, the merchant account can be opened.

However, in the case of guns, firearms and weapons dealing the underwriting banks reject to underwrite. In the case of risk-free business various concessions like no setup fee, simple and fast application process are offered. In the case of high-risk businesses like firearms, they are forced to choose costly options like high fees and rates. The majority of the banks adopt a less-friendly attitude towards the merchant accounts of weapon dealers. Many of such accounts are closed by few credit card processors as part of their corporate policy.

Startup / New Business OK

In addition to the above difficulty, when the arms business is a start-up, the rate of rejection of merchant account application is more. The weapon industry itself is considered as risky as a whole. The banks withdraw their ‘No rolling reserve requirements’ in the case of a weapon dealing startup/business. Unfortunately, weapon businesses may not have clients with recurring billing. Hence, they need faster payment processing and billing options. Also, there is always a high risk of chargebacks for huge amounts. All the fees and requirements of online merchant accounts revolve around High risk Vs low-risk classification. These banks insist on checking the credit history of the businesses. Sadly, startups do not have such historical information. Hence, rates vary by startup Vs history.

Domestic & Offshore Options


Arms businesses badly want to take advantage of the online selling avenue. They too want to sell via iPhone/Droid Mobile Apps and virtual terminals. But reluctance on the part of credit card processors and banks deprive them of getting gateway setup. Gateways and terminals are mandatory without which one cannot enter the online market.

These businesses have clients all over their world. Hence there is a high risk of the card, not present. Considering all the above options, it becomes very important for these businesses to get a merchant account who can provide them all types of services like ACH Processing/Check Processing, Check Drafting etc.

Certain banks offer domestic and offshore options in the merchant account. The basic difference between these accounts is that an offshore acquiring bank provides an offshore account. Offshore acquirers consider merchant account applications without hard rules. Hence it would be easy for guns, firearms, and weapon dealing businesses to face fewer chances of rejection. Whereas, domestic acquirers never take up these accounts.

The underwriters of different countries follow different guidelines for underwriting. Hence few offshore underwriters do not reject merchant account application by arms and weapons dealing businesses. They do not demand high underwriting, premium too. When such is the case, the offshore acquirer easily accepts these applications. So, this makes merchant account opening very easy for the weapon dealers.

There are many advantages for weapons dealers to have an offshore account like the following:

  1. The application process is faster for offshore accounts than domestic accounts.

  2. Payment is offered in multiple currencies in this account

  3. The jurisdiction of offshore acquirers normally has a very low tax rate. Sometimes the tax rate is zero.

  4. In offshore accounts, there is no cap as to a number of transactions per month (or) the volume of transactions per month.

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