Payment Alliance International sees an opportunity in the recent fallout of processors, banks, lenders and merchant services vendors that won't work with the firearms industry, and developed a program to provide its processing services to legitimate gun dealers.

Payment processors including Square, Intuit and PayPal prohibit their merchant clients from taking payments for firearms and ammunition on their systems. And so long as firearm sales remain a hot-button political issue, many processors are not likely to warm up to the notion of providing their services to gun dealers, says Nathan Danus, vice president of national accounts at PAI.

The Louisville, Ky.-based company created its "Shooting Sports Payments Package" to serve legitimate, licensed firearms dealers that are looking for help accepting card payments. The services include online payments processing, mobile point of sale card readers and Automated Clearing House transactions for merchants like firearms dealers, gun clubs and shooting ranges.

“We’ve done our due diligence on this in terms of our underwriting policy, as we simply won’t underwrite a merchant who does not have a Federal Firearms License,” Danus says.

There are other policies in place to safeguard firearm sales. For example, consumers that buy guns online can't have the purchase shipped to their home addresses. The independent sales organizations working for PAI have guns shipped to the nearest licensed dealer for pickup, where the dealer conducts the necessary background checks prior to completing the transaction, Danus says.

“We provide payments services to merchants we know are licensed dealers,” Danus says. “The liability falls on the dealer to make sure his customer can purchase a gun.”

After the Durbin Amendment to the Dodd-Frank Consumer Protection Act allowed merchants to seek alternatives for routing payments, PAI helped make that transition easier for firearms dealers.

“This was their chance to get off tiered pricing and we wanted to offer a Square-type pricing structure,” Danus says.

Through marketing with the National Rifle Association Business Alliance and the National Shooting Sports Foundation, PAI was able to spread the word “that these merchants are not stuck without a payments processor and merchant services provider,” Danus says.

PAI wants to make sure that licensed dealers are not held back from using the latest payments technology to develop their businesses.

“We’re all in this together, and the PAI will continue to help the shooting sports industry use payments technology to grow revenue, whether it’s in a retail store, through an e-commerce website or on a smartphone or tablet,” Danus says.

PAI’s services hit home with ISOs who operate in rural areas where gun dealers and owners are common. Tasker Payments, located in rural Maine, recently established an ISO relationship with PAI so the company could provide firearms merchants access to payment services through Tasker’s gateway software.

The sale of firearms represents “one of the issues the payments industry periodically faces over time” that apply to hot-button social topics, says Scott Strumello of New York- and London-based Auriemma Consulting Group.

“I can’t comment on the social aspects of gun sales and gun control, but from a payments perspective, there is a real need there [for licensed dealers],” Strumello says.

There should not be restrictions on a legitimate merchant to be able to accept payments from plastic cards, Strumello says. “Even if some don’t like this kind of business, most Americans would not be in favor of restricting the ability of a merchant to accept payments,” he adds.

Payments processors like PAI that are 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.

PAI faces challenges that other payment processors likely don't want to take on, Strumello says, adding that businesses such as Payment Alliance develop systems for the checks and balances needed in firearms sales.

“A gun dealer can be 100% on the up-and-up, but there is a list of check points that make it challenging [to provide merchant services]," he says.

The firearms industry is being ostracized by payments companies the same way Planned Parenthood clinics have been, or medical marijuana dispensaries may be in the future, Strumello says.

The payments trend against gun dealers is not likely to subside anytime soon, Danus says.

Every few months, another processor or lender changes underwriting guidelines to deny payment acceptance from gun dealers, Danus says.

“We’ve been doing this for 10 years now and have a thorough understanding of the guidelines and requirements” for merchants to legally sell guns and accept payments, Danus adds.

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