American manufacturers made about 11.5 million rifles, shotguns, rifles and pistols in 2016, according to the most recent numbers provided by the Bureau of Alcohol, Tobacco, and Firearms (ATF). That was double that number that were manufactured in 2009.
Obviously, operating an online gun business can be a lucrative business, but it also comes with high stakes and great responsibility. Before you can begin applying for a gun merchant account so that you can accept and process credit card transactions, you have to make sure you are following all laws and regulations.
Know the Laws
To legally operate an online gun store or have a business presence on an online auction site, you must be a federally licensed firearms dealer or have access to one. You can apply for a Federal Firearms License (FFL) from the ATF. Typically, applications are processed within 60 days. All interstate firearms transfers are done between FFL holders. You cannot start conducting business until you have your FFL.
Though it is legal to purchase guns over the internet, federal laws prohibit merchants from shipping serial numbered parts, handguns or long guns directly to out of state consumers. Firearms must first be transferred to a federal firearms licensed dealer or (FFL) in their same state of residence. Dealers that accept the transfer on the purchaser’s behalf will require the buyer to fill out a 4473 Form, conduct a background check as required by federal law. For this transfer service, an FFL will typically charge a nominal fee. Private, unlicensed sellers are not bound by this law.
The legalities surrounding possession and ownership also get confusing because individual states have their own laws. Some states, such as Colorado and New York, require background checks through the National Instant Criminal Background Check System (NICS) for those who try and buy guns through private sales. States, such as Montana, Louisiana, and Arkansas, have few to no regulations on private gun sales, including online purchases.
When It’s Time to Apply for a Gun Merchant Account
After you learn and understand the laws where you are doing business, you will need to apply for a merchant account so that you can accept credit card transactions. The murky laws, the industry’s background and history, and a reputation for excessive chargebacks makes it difficult to obtain a gun merchant account from a traditional financial institution. Since banks classify gun merchants as “high risk,” your best chances of getting a gun merchant account is to apply to a high-risk merchant services provider.
Once you find a high-risk provider, you will need fill out an application and submit the following documents:
- A valid, government-issued ID, such as a driver’s license or a passport
- A bank letter or a pre-printed voided check
- 3 months of the most recent bank statements
- 3 months of the most recent processing statements, if applicable
- A SSN (Social Security Number) or EIN (Employer Identification Number)
Merchants also need to have chargeback ratios below 2% and a fully functional website. All of this information will be submitted to the merchant services provider’s underwriters to assess the business’ risk. Merchants are more likely to get approved for a gun merchant account if they have no outstanding debts, a good credit score, and some money in the bank.
Other Important Pieces
Security and protecting sensitive information is a top a concern when operating any online business, especially one involved in the sale of firearms. Therefore, it is important that you implement standard security technology, like a secure socket layer (SSL). An SSL establishes an encrypted link between your customer’s browser and a web server, ensuring that any information that passes between the two are private.
When you are ready to apply for a gun merchant account, consider eMerchantBroker.com (EMB). EMB is a high-risk merchant account provider that works with businesses of all sizes and industries. Its application process is simple and easy.