The Most Common Reasons Firearms Merchant Accounts Get Declined

Firearms and related businesses within the industry, like ammunition and accessory suppliers, are legal and safe to operate, as long as they strictly follow all laws and regulations. However, many financial institutions still consider the firearms industry "high-risk" no matter a company’s transaction history.

This means you may still have a tough time getting approval for a merchant account for your firearms business, even with the right intentions. To improve your odds of getting approved for a high-risk merchant account like that of a firearms one, it helps to know what obstacles you might face and how to avoid or get through them.

Better yet, you can work with Adaptiv Payments for a seamless, hassle-free process.. Through our deep experience with high-risk merchants, we're able to manage the unique challenges of nearly every industry. Make us your payment processing partner, and you'll enjoy seamless transactions and stable growth.

Below, we share the most common reasons firearms merchant accounts get declined and how your company can avoid them.

Working in an Industry Considered High-Risk

In general, banks and other financial institutions get very nervous around industries they consider to be "high-risk." These are fields of business that involve a higher rate of chargebacks and fraud than others due to the nature of their products. Particularly with firearms businesses, it comes as no surprise that you'll have difficulty getting approval for a merchant account. They are among many businesses that encounter a high level of public scrutiny, controversy, and sudden government regulations. Operating in such an environment, it’s no wonder banks find it difficult to approve them for a merchant account.

Examples of High-Risk Industries

• Adult entertainment
• Tobacco
• Travel and hospitality
• Legal and financial services
• Gambling

How to avoid this issue

Aside from changing industries altogether, to make sure your merchant account application is approved, you'll have to work with providers that specialize in high-risk industries. They may not have the same level of brand recognition as companies like Stripe or PayPal, but the best high-risk merchant account providers, such as Adaptiv Payments, possess reliability and experience in these specialized markets.

Suggesting Potential Illegal or Brand-Risk Activity

Card networks are very strict about accepting transactions with businesses that may appear illegal or potentially harm their brand. So, if your products, marketing, shipping practices, or even the content on your site suggests potentially illegal or risky activities, it could lead to merchant account providers and sponsor banks declining your application. Above all, a bank's decision to decline your application for a firearms merchant account is primarily about risk reduction.

How to avoid this issue

Make sure everything is strictly within federal and state law, from inventory listings to website copy. Keep everything above board. Remove any ambiguous text. For example, never mention that an 80%-built receiver is "ready-to-fire". Also, follow the ATF's "Frame or Receiver" rule to ensure you comply with the traceability and accurate labeling practices.

Having a Poor Business Reputation

Businesses are required to provide access to a wide range of documents and information that showcase their credibility. Plus, in today's digital world, it's tough to be considered a genuine business without a proper website. Additionally, if you have a long slew of customer reviews that make your online reputation look bad, it only increases the risk of your merchant account application being denied.

How to avoid this issue

Before applying for a merchant account, work on making your company appear as authentic and professional as possible. Ensure your website is secure and well-designed to maintain a modern appearance. Respond to poor customer reviews and improve your customer relationship practices to ensure that new reviews are more positive and fewer negative reviews are sent. Finally, ensure that your business and website are listed on credible directories, with profiles that contain up-to-date and accurate information.

Possessing a Bad Credit History

Part of the application process is for your merchant account provider to review all aspects of your financial history. If you have an unfavorable personal credit or transaction history, that will factor heavily into whether you receive approval. A bad credit score is a serious red flag for financial institutions. It shows you have considerable issues with paying back loans, or your business has persistent troubles with chargebacks and fraud.

How to avoid this issue

Long before applying, make sure you take steps to improve your credit score. Even if you're looking to get a high-risk merchant account, providers will still look closely at your credit score before giving their approval.

If you need a merchant account sooner rather than later and have a poor credit history you can't get rid of, you can also have a business partner, spouse, or family member cosign with you on the application so that it reflects a better credit score.

Lack of Addressing Compliance Gaps

In the underwriting process, merchant account providers will review whether your company follows Bureau of Alcohol, Tobacco, and Firearms (ATF) requirements. These include:

• Regular background checks using the National Instant Criminal Background Check System (NICS).
• Verifying 4473 Forms to ensure buyers are allowed to purchase firearms.
• Ensure your business has an up-to-date Federal Firearms License.
• Proper inventory control and persistent recordkeeping.

Missing any of these requirements will almost guarantee the denial of your merchant account application, especially if you are an Ecommerce firearm business.

How to avoid this issue

Follow ATF guidelines and best practices. Clearly state that your site only sends to Federal Firearm License (FFL) shops. Keep your inventory and sales records accurate and precise.

Applying for a Merchant Account? Get Approved & Grow with Adaptiv Payments.

Payment processing companies are going to scrutinize you hard, especially if you run a high-risk business. Avoiding the pitfalls we listed above can help, but the most effective thing you can do is work with a payment processor that knows your industry, its regulations, and the complex issues your business might face (and doesn’t judge you for them).

That's why numerous firearms businesses work with Adaptiv Payments. We provide personalized merchant account services to each business, keeping up to date with all the latest regulations and ensuring you stay in compliance. On top of that, you get top-notch support. No machines or chatbots. When you need us, talk to a dedicated support representative.

Our services also feature:

• Advanced fraud prevention and chargeback protection
• Multiple currency acceptance for international business
• Tailored solutions that fit your business's needs

So, if you need a reliable merchant account provider, consider Adaptiv. Contact us to learn more about our white-glove services and more. Let us help your business stand tall and grow.