POS and card processing (Visa/MC) issues
An interesting blog you have here. One of my clients pointed me to this, in fact.
I'm a gun enthusiast and work in card processing, so I have a taste of both worlds:
1. Unjust treatment of gun owners as criminals by the rest of the public and the government.
2. Unjust treatment of gun dealers by credit card processing companies.
Now, here's the truth about card processing and guns.
Visa and MC, and Amex have nothing to do with processing. They are the card BRANDS, associations that lend their brand name to card ISSUERS, such as banks and credit unions. Banks and credit unions sometimes not only act as ISSUERS but also own CARD PROCESSORS. Some of them are independent though.
The role of a CARD PROCESSOR is to serve as a secure GATEWAY between the end USER and the ISSUER (the bank).
There are many card processors in Canada, and even more in the world. Firearms dealers and sellers can be found on someone's black list, alongside home improvements, furniture sellers, travel companies, etc. Still all of them find a way to process credit cards Why? Because people processors and the banks are afraid of two things:
1. Reputational risks
2. Chargebacks and returns
See, Visa and MC, along with the Issuing Banks are huge organizations and they'd rather blacklist a seller or two or even the whole category or two but maintain their "pristine" reputation globally. As to the chargebacks, they have 100% free liability schemes where they build confidence with the end card user and promise the end user that they'll cover 100% of questionable transactions -- that's their response to fraud and stuff. In example, if a client buys something and then doesn't like the product and cannot return it, he can call his bank and get his money back. The Issuing Bank and Visa are at a loss.
So they compiled such lists where statistically they have a higher degree of returns, business failures, etc. They treat card processing as unsecured lending.
Coming back to the issue of canceled merchant accounts and stuff. I wasn't there, so cannot attest to what actually happened. But if a merchant discloses upfront that he is dealing with firearms, etc., then he is either declined right away or, if approved, can process for a long time without any fear.
The best solution is to disclose the truth in the application (just like with insurance people
) and choose the processor that doesn't mind dealing with firearms dealers on their books. Oh, and you don't have to limit yourself to Canada for processor search. USA is much more lenient that way.
Contact me if you need further help with processing and I'd love to help.
Best regards,
Alex
mail@pbhcanada.ca
