Coronavirus pandemic drives up gun payments

While reports of toilet paper and hand-sanitizer shortages may be common stories on the nightly news, one consumer goods category is flying off the shelves at an even faster pace, one never seen before – guns and ammunition, increasing payments volume for gun shops, a merchant category financial service providers traditionally avoid.

More than 9.2 million background checks for gun purchases were conducted in the first three months of 2020, up 35% from the same period in 2019 according to the FBI NICS tracker.

Finding ammunition on gun dealer store shelves is equally becoming difficult where sales of certain calibers such as 9mm are topping 1,000% increases and .223 (AR-15) are reaching levels of 5,000% sales increases according to Ammo.com.

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The highest number of monthly background checks for gun purchases conducted through the National Instant Check System (NICS) since it was founded in 1998 was recorded in March 2020 at 3.741 million checks. These checks are required by law for all purchases made through federally licensed gun dealers and do not constitute a final sale but represent an attempted purchase. Additionally, only one check is required if a multi-gun sale is attempted during a single purchase.

Typically the first two months of the year tend to have lower sales as gun purchases are often stronger during the winter holidays as guns are often purchased as holiday presents. The FBI conducted 41% more gun purchase background checks in March 2020 than it did in March 2019 (2.645) based on NICS Firearms Checks monthly data.

“The current crisis is causing a fear in consumers about what will happen next. What we are seeing is mostly new gun buyers. We’ve seen panic buying in the past, such as after Newtown in 2012. But that tends to be restricted to certain calibers, guns such as AR-15s and high capacity magazines that people think will be banned. Now demand is across the board for shotguns, pistols and rifles of all calibers. We are almost completely sold out of everything,” said Garrett Martin, firearms director at Sportsman’s Finest an Austin, Texas-based gun dealer.
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Five of the top 10 best-selling days for gun purchases based on the number of background checks conducted were recorded in March 2020 according to the FBI (based on NICS tracked data which goes back to 1998). All of the remaining five days in the top 10 were “Black Fridays” for the years 2015 through 2019. While Black Friday shopping may be splurge purchases or holiday gifts, the strong sales in March are now reflecting a new consumer demand amid the coronavirus crisis.

Demand in March at many gun dealers was so strong that lines formed at many dealers around the nation as reported by CNN.

"Americans are flocking to gun stores to buy firearms and ammo because they have decided - without prompting - that they need and want the means to protect themselves and their families during these unprecedented times,” said Amy Hunter, director of media relations for the National Rifle Association (NRA).
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Gun ownership covers four in ten adults, either directly or in a household, with more than half on non-owners stating that they could see owning a gun in the future. According to a Pew Research Center Demographics of Gun Ownership Survey conducted in 2017 42% of U.S. adults reported that they personally owned a gun or that someone in their household owned one. Men are the most likely gender to own a gun coming in a 39% whereas women are almost as likely to own a gun (22%) as they are to live with someone who owns one (18%).

Gun ownership is also very likely to rise among non-owners as just over half (52%) reported that they could see owning a gun in the future. Men are more likely to say that they would consider purchasing a gun at 62% compared to just 45% of women.

Additionally in times of crisis, such as the current coronavirus pandemic, consumers are often stirred to think about personal safety, which is something gun owners say is a top reason for owning one. Two-thirds (67%) of gun owners stated “for protection” was a major reason for personally owning a gun with urban and suburban adults coming in at a slightly higher rate of 71% and rural adults coming in at only 62%.
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Ammunition sales have skyrocketed to unprecedented levels reflecting a degree of panic buying almost never experienced before. According to data from ammunition retailer Ammo.com its sales are up by 792% for the period February 23 through March 31 compared to January 1 through February 22, 2020. Sales volume to its top selling state, Texas, was up by 972%, followed by Florida which was up 641% and Illinois coming in third at a 792% increase.

In all of its top 10 states 9mm handgun ammunition was the best seller with the AR-15 modern sporting rifle caliber .223 coming in second place. The third best-selling caliber was .40 S&W in six states while .45 ACP was the third best seller in four states (Florida, Illinois, Colorado and Arizona).

The biggest sales increases for 9mm ammunition were recorded in Arizona (up 1,473%), Colorado (up 1,427%), Washington (up 1,377%) and Texas (up 1,338%). The largest sales increases for .223 ammunition were in Colorado (up 5,940%), Texas (2,478%), Georgia (up 2,252%) and Ohio (2,217%).

Ammo.com noted that the spike in its ammunition sales started on February 23, 2020 when the term coronavirus began to gain traction according to its monitoring of Google Trends.
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Two-thirds (67%) of gun owners own more than one gun and 29% own more than five guns, but when it comes to single gun owners the handgun is the most popular. According to a Pew Research Center Demographics of Gun Ownership Survey conducted in 2017 62% single gun owners own a handgun compared to roughly one in five owning a rifle (22%) or a shotgun (16%).

When it comes to paying for a new handgun there are limits of what can be used as not all financial services companies want to deal with financing gun purchases. For example, a number of companies won’t deal with firearms or ammunition. PayPal’s policies state: “We don’t allow PayPal members to buy or sell any kind of firearm, whether it’s in working order or not. The same goes for certain firearm parts and ammunition."

“I wish I could put the guns on a payment plan. It would be a dream since we could sell things a lot more easily. Our normal payment mix is about 60% credit card but that is trending to about 75% now,” said Martin.
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Most states consider gun dealers “essential businesses” that must remain open for public safety based on data tracked by the NRA with only Massachusetts, New York state, New York City and New Mexico ordering them closed. The NRA is suing New York State’s governor Andrew Cuomo who ordered gun dealers to close as being non-essential stating that the restriction is unconstitutional according to a Bloomberg report.

“Gun shortages will continue because certain companies such as Beretta and Benelli who are based in Italy have been shut down for weeks so there won’t be a resupply coming which will cause further panic as no new stock is coming in,” said Martin.

In fact, as the coronavirus pandemic closes more manufacturing factories across hard-hit Europe other popular gun manufacturers will also be affected including Glock (Austria), Sig Sauer (Germany and Switzerland) and Hechler & Koch (Germany). Similarly in the U.S. where coronavirus has affected more than 400,000 Americans according to Johns Hopkins University’s Coronavirus Resource Center there is the potential of factory closures and slowdowns among U.S. firearms and ammunition companies that could lead to even steeper long-term shortages.