Credit card processing isn’t a complicated process, but the financial industry terms can be a little confusing for new merchants in the firearms industry trying to understand how it all works. We created this article to help merchants understand the different players and parts to processing firearms transactions.

The Players Invovled

There are a number of players that jump into action when your customer swipes their card.

Merchant: The firearms company or business owner who is accepting the payment.

Cardholder: The customer who owns the credit card being used for purchase.

Card Association: VISA, Mastercard, American Express, and Discover. These are not banks, but rather governing bodies that set interchange rates, arbitrate between acquiring and issuing banks, and maintain and improve their networks.

Acquiring Bank: The merchant’s bank. They hold the merchant’s funds and acquire the money from a sale. In this context, they accept the funds from the sale once a card is authorized and deposit them into the merchant’s bank account.

Issuing Bank: The cardholder’s bank. They issue cards to consumers and are a part of card associations. Issuing banks pay acquiring banks for the purchases their cardholders make. The cardholder then has the responsibility to pay back that amount in accordance with their credit card agreement.

Payment Processor: This company handles the processing and batching of purchases made with credit, debit, or gift card payments. They typically assist with technology needs and customer service as well, acting as middle-men to the card associations and banks.

What Happens Per Order

Whenever one of your customers uses a credit card to make buy something, each of the above parties is involved. Here’s a quick breakdown of the process and where each party plays a role.

Step 1: The customer purchases an item with a credit card.

Step 2: The credit card is swiped through a processing terminal and that terminal recognizes the card and contacts the credit card company.

Step 3: The card is authorized.

Step 4: The credit card company sends the payment to the merchant’s bank through a certified merchant services provider. *

Step 5: The merchant’s bank deposits the payment into the merchant’s bank account.

Step 6: At the end of the month, the statement is sent to the merchant that details the interchange for all transactions that month – which is the fee set by credit card companies for merchants to accept their cards.

Transaction Fees

Now that we have a pretty good understanding of the parties involved and how they all work together, we can take a look at what types of fees can be associated with a transaction. These vary based on your merchant services provider, so pay attention to your monthly bill to ensure you aren’t overpaying for your processing.

Transactional Fees

These are fees that are associated with each transaction you run at your business. They can be broken down into interchange and cents per transaction. Both of these are the only mandatory fees associated with credit card processing since they are set by the credit card companies themselves. You are essentially paying Visa, Mastercard, Amex, and Discover for the ability to accept their cards.

Interchange rates vary based on the type of card you are running. The more expensive it is for the credit card company to maintain the card – rewards, cash back, perks – the more expensive the interchange. This means that debit cards are typically the lowest and business credit cards are typically the most expensive.

Recurring Fees

On top of interchange, a lot of providers like to make an extra profit by charging merchants fees for anything under the sun. These are typically seen on your monthly statement, time and again, and are never actually required in order to accept card payments.

Keep an eye out for monthly minimum fees, statement fees, batch fees, next day funding fees, annual fees, IRS report fees, and others on your statement each month.

One-Off Fees

Believe it or not, there are even more fees that can be triggered by individual actions. These can include terminal fees, early termination fees, setup fees, reprogramming fees, PCI compliance fees, address verification fees, charge back and retrieval fees, and payment gateway fees.

Firearms Merchant Rules

The rules regulating firearms (not parts) bought and sold online adds a few more rules and regulations when selling or buying online.

Transfer of firearms ownership requires an FFL holder:

A Federal Firearms License (FFL) transfer dealer is required for the transfer of firearms ownership between individuals.

Buyers should either have a FFL or find a FFL in their local area to receive and manage the transfer of the item for them before they place a bid or purchase an item. This typically means the buyer must contact a local FFL transfer dealer to make arrangements for the transfer.

Accessories such as: holsters, clips, sights, scopes, etc., often are not required to ship to a FFL. Non-firearm items such as: air guns, knives, ammunition, antique guns built before 1899, and some gun parts also do not require transfer by a licensed dealer but may require proof of age before shipping. 

Please review the Federal Bureau of Alcohol, Tobacco, and Firearms (ATF) FAQ about transferring ownership of firearms by unlicensed persons: http://www.atf.gov/qa-category/unlicensed-persons.

Shipping restrictions:

If you have any questions or concerns about whether an item can be shipped to you, please contact your local FFL transfer dealer and/or ATF field office, or send a message to the seller by clicking “Ask Seller a Question”, located in the item listing prior to placing a bid.

Age restrictions:

You must be an adult who is able to enter into a contract. There are age limits on the sale of certain items. The seller will ask you to verify your age (typically, by providing a copy of your driver’s license) before you purchase the item.

  • In general, you must be at least 18 years old to buy items on this site.
  • To buy pistol ammunition, you must be at least 21 years old.
  • To buy rifle ammunition, you must be at least 18 years old.

Background checks:

Anyone purchasing a firearm must be able to pass a background check. See https://www.atf.gov/questions-and-answers/firearms-qas for more information.

State restrictions:

Certain types of items are illegal in certain state, county and/or city; for example, assault weapons cannot be sold in California, and certain types of ammunition are illegal in certain states and cities. We recommend you review:

In Summary

Hopefully this article is helpful

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