Licensed gun dealers are finding it increasingly hard to accept card-not-present credit card or debit card transactions, but companies such as Tasker Payment Gateways are not gun-shy when it comes to serving the firearms industry.
Because he operates Tasker Payment Gateways out of rural Maine, president and CEO Matt Tasker says gun dealers have often approached him, requesting a way to be able to accept online payments from gun buyers. Tasker established a partnership last week with Louisville, Ky.-based Payment Alliance International to link his gateway software to PAI's payment processing services.
"I don't get into the nuts and bolts or the politics of this, but major processors are going to make sure these are safe businesses, and not some fly-by-night gun dealers," Tasker says. "There are background checks involved for the merchant and customers, and they are just not approved in 10 seconds."
If a consumer purchases a gun through an online dealer, the gun is not shipped to the address of the buyer, Tasker says. "It is shipped to a Federal Firearms Licensed dealer and the buyer has to go there to pick it up," he adds.
The dealer would then complete the necessary background checks on the buyer, Tasker says. "I think it is a clean way of doing business," he adds.
Gun dealers have had problems obtaining e-commerce payment processing in a card-not-present environment because credit card processors and financial institutions would not work with them or would charge exorbitant rates and require high reserves, Tasker says.
Payment processor and mobile payment provider Square Inc. updated its seller agreements a week ago to exclude merchants who sell guns.
In Square's previous contract, merchants agreed to not accept payments for Internet, mail or phone orders for firearms or weapon sales. Its new agreement prohibits even face-to-face sales of firearms, firearm parts or hardware and ammunition.
Square's action came a few months after gun dealers raised complaints against Intuit, which provides the GoPayment mobile card reader in addition to Quicken and Quickbooks business management software. Some gun dealers accused Intuit of being "anti-gun" when it informed firearms dealers the company would not "support or service anyone who manufactures, distributes or sells firearms."
PayPal Inc.'s acceptable use policy has prohibited transactions involving ammunition and firearms for several years.
Gun dealers say payment processors don't want to indirectly be part of the gun control debates unfolding in Washington D.C.
"Processors could be leery of bad press, and they just don't want to deal with that," Tasker says.
Current events resonate with major payments companies, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.
"Certainly the most recent events of gun violence have magnified it and some payment processors don't want the stigma of guns attached to them at this time," Riley says.
The Tasker-PAI pact takes aim at gun dealers who have a Federal Firearms License or are established as a shooting sports industry professional, Tasker says.
A gun dealer seeking Tasker's gateway software has to be approved and underwritten by the merchant processor, Tasker says.
"I just provide the payment gateway software," Tasker says. "But at the sub-level, the underwriter verifies identity of the dealer and completes all other checks."
Other merchant categories are sometimes blocked by card processors or through state or federal regulations, Riley says.
"Many verticals, such as gambling, are prohibited from accepting credit cards," Riley adds. "For Tasker and PAI, anything they do should try to tighten the process [of buying guns online] and safety at this time."
Payment Alliance International did not respond to inquiries by deadline.
Payment processors willing to take on high-risk transactions have been encouraging acquirers to send that type of business to them, rather than turn it down. San Jose, Calif.-based Atlas Payment Processing, for example, is openly seeking business from companies that handle firearms, electric cigarettes, online dating, horoscope and fortune telling.
Spokane, Wash.-based payment processor Electronic Transfer Inc. offers services to retail and online gun dealers, providing advice to legitimate Federal Firearms License holders on what to expect when trying to secure a merchant account through a bank.
The dealer can determine quickly whether a bank will accept a firearms dealer based on what documentation it requires, the processor states on its website.
"Every online firearms dealer merchant services company must make sure you have a valid Federal Firearms License (FFL) and that you only ship to other licensed FFL dealers," Electronic Transfer states. "If this isn't the first thing they verify with you, then you may have big issues once you start processing," the processor adds.
Acquirers and processors face a similar risk proposition in dealing with the emergence of legal medical marijuana dispensaries, another industry embroiled in public debate.