Why is it that gun stores seem so vehemently anti-credit card? I know there are processing fees, but i can't think of a single industry other than gun sales where 95% of vendors charge a credit card surcharge. Just curious what people's thoughts are...

the smaller LGS dont have the same margin as the larger/online vendors.  hence the surcharge.

This.
3% is 3%  In some places it's more.
This is just part of it.

Hell, a lot of the big places charge a surcharge. Buds guns, kentucky gun co, centerfire... and that's just the top of my head.

Extremely low margin on guns and ammo

Sums it up.

I cant think of any local brick and mortar stores that charge CC fees.

yup...


and they get wacked for the processing fee.

I was curious how many shops did this.  I personally only know of one that does it.  The funny part is, its the biggest gun store I know of.  None of the smaller shops I go to do it.
I always HATED having to keep thousands of dollars on hand just so I could shop there.

The one that baffles me is gunbroker sellers that won't take cards at all.  Hello, it's the internet. Do you really think I'm going to truck down to the bank, pull out the cash, then go the Post Office for one of their super duper money orders all during regular business hours which happens to be the same hours I work?

$12.95 for 100 CCI .22LR? I say they are getting plenty margin there..same thing AR ammo..some stores still charging like post 2008 days.

I am a capitalist, I don't mind gunstores profiting on suckers. I won't be one of them. Internet and a decent FFL and mail order. MAKES no sense to EVER walk into a gun shop to purchase something.

TAPCO, MAGPU, MFT, fuck even uncle mikes shit is priced like Galco..not to mention guns..

Have at it, you wont get a single $ from me.

Show us on the doll where the greedy gun shop owner touched you.
Seriously dude. Guys who shop at gun stores aren't suckers. They are just consumers. And if your LGS is charging 12.95 for CCI then that particular shop is just put of touch. 10 bucks a sleeve here.

Theres always someone who has to make sure everyone else is clear that hes the most savvy consumer there is.

None of my LGS's do.  It seemed like the dealer I bought the $30k machine gun from would have accepted a card without adding a fee if I insisted, but I took pity on him and paid by check.  

Online is WAY cheaper than local almost always, so I can see their margins being low enough that they pretty much have to charge the CC fee.  Honestly it's the banks who need to get fucked.  It doesn't cost them nearly as much as they claim to process charges.  I'll give up my 1.5% cash back if you'll stop making the merchants mark their prices up 3%.

I overpay at local gun shops a few times a year, whether on guns, ammo, or transfer fees.

But I can also walk into some of those shops and they'll fix stuff or help out with something for free.

I'm paying twice as much for an MG transfer as some home SOTs charge, but I'm doing it at a established, reputable shop that I know isn't going to finger bang my gun, either.

Fair enough point. Not claiming to be a master armorer, with what I own and what I have and what I have experienced, nothing I have can't be fixed by me and youtube/ ARFCOM.

Pretty much.

If i want the absolute best price I shop online.

If I want it RFN, i accept that will cost me a premium to get locally.

Shrug.

Whenever I shop at a physical location, and see a price a little above what I could find it for on the internet, if its within reason, I factor in being willing to pay for the convenience of getting it right then and there and not waiting, knowing Im avoiding any issues with it getting to me, being able to look it over and knowing what Im getting before I pay for it, and the willingness to support a local business.

I can appreciate the benefits of the internet, but I dont think Id want to watch local businesses die out and everything become digital.


I really like the whole ritual of searching out, finding, and buying a gun anyway.

AR stuff is easy enough to do at home. Some other stuff isn't.

I like having a good relationship with my LGS's. That way I can let them know what I'm looking for and they'll save it for me if someone brings one in.

1. Additional risk to the seller.  One pissy buyer can dispute the charge and cock up your ability to process other CC orders.

2. Accepting credit card payments generates a paper trail with tax implications.  Cashier's checks and money orders do not.

1. Not taking cards is an additional risk to the buyer.  

2  Money orders have a paper trail as well.  I'm not interested in  helping a dealer scam on his taxes.

Because your government classified them as "HIGH RISK".  They pay extremely high rates.

If you look around you can find no cc and shipping fees online.  I won't buy from a place that charges either of those
 But I'm stingy that way.

If you dispute the transaction, you will almost always win because everyone in my industry hates guns.  Operation choke point and such. I wish people would try to work things out before picking up the phone and disputing charges with their bank. If you exceed 1% chargeback to sales ratio, Most all processors will drop you and then you have to get high risk processing that lumps you in the same category as porn,bongs, and steroid merchants.

This sort of crap translates into "their problem, not mine".

Roll the fee into your prices.  Figure out the percent of your customer base that is using cards, use a 2.1% or whatever multiplier with your pricing, and stop hanging out in the stone age.

Either your competitors are doing the calculation and are hiding it or have a better processor, because it isn't across 100% of the industry.  And I'm also not going to help out with their tax evasion schemes.

Mixed bag around here some will not accept CC at all or charge a extra 3%, some don't mind a CC at all, I always viewed it as if your just a small time guy barely hanging on 3% might be a big deal.

As others have said the low profit margins on firearms and even lower margins on ammunition make sharing 3% to 6% with CC companies a money loser.

Also "Operation Choke-Point" really pissed off much of the industry. It's hard to willingly support those that hate what you do for a living.

What constitutes as a number that equals low profit margin?

When my local gun store is $100 higher than an average operation on the internet on a 4-500$ item I have a hard time believing the margin is their problem.  

I feel like its more of a volume of sales problem on their end because they choose to live by low sales high margin vs. higher sales lower margin.  When I can purchase over the internet and save $100 even with a transfer fee added to it I feel like they just have not adapted very well to current times.

Eta:  With the advent of the internet and the ability to see the going rate for items elsewhere no longer are the days of slapping a price tag on of your choosing without pushing customers away.  Much the same as car sales now days.

That $100 over Internet pricing isn't all profit. Leased space is stupid expensive, taxes will crush a small business, employees cost a business about twice what they are paid. Is your LGS moving a 1000 guns a month? If not, they are not getting the same pricing as the online gun sellers.

You are correct. The brick & mortar, family run gunshop is going to have a harder and harder time trying to stay relevant.

Websites aren't cheap to develop and host if you've got any sort of appreciable volume, they have office/warehouse space, and hire employees.  Own your own webservers?  Lots of overhead, rack space, bandwidth.  Going to cloud hosting?  There's a premium for that.  Don't want to roll your own tech stack?  Licensing another shopping cart has recurring fees.  PCI DSS security compliance on your web-facing component.  E-commerce has a lot more than a dude in his basement drop shipping from RSR.

It isn't apple to apples, but each has its own set of costs.  One model is desperately clinging to the 1970s.  The other is moving ahead.

As someone said, if the 3% on a card is killing your business, your model isn't solvent anyway.  Being looped in with other "high risk" categories is pretty lame though.  There's a fuckton more fraud that goes on at Walmart and Best Buy on electronics than at Herp & Derp Guns in Backwater, Nowherestate.

I can feel the pain of gun store owners.  I wanted to open a retail gun store in the future, so I started a part time business selling at gun shows.  A lot of people in Hawaii compare and buy from Amazon due to the low prices, free shipping and no sales tax.  If I match Amazon prices, many times taxes and CC fees are more than what I make in profit.   On some products, Amazon sells things cheaper than what I pay to the distributor.  It's a relief to local small businesses that Amazon will start charging sales tax here, and it would be a bigger relief if all internet stores charged tax.

I guess it's the future where large efficient businesses in low cost states -take over.  Very difficult to run a business here in Hawaii with high taxes and very high cost of doing business.

Well.... ALL credit card companies charge the retailer about 3% for the honor of accepting their card!!!  Some retailers price that into the items, some do not.  Those that don't will charge the additional to make up for what the card company charges them.  TANSTAAFL!

Question- would you invest $6,500.00 in order to earn $108.78?

New long guns have a 5% markup.  

Example:  I buy a Barrett for $6,500.00.  A 5% markup is $325, so the price to the public is $6,825.00.  Sales tax here is 5.6% or $382.20, so now the out-the-door price is $7,207.20.

(Yes, the government just made more on sales tax than I will in profit.)

Someone uses a credit card.  The fees are 3%.

1.  3% of $7,207.20 is $216.22.

2.  That 3% is eaten from the sales tax too- that's not exempt.  I have to make the government whole- they don't care that I had to pay to collect it.  They're owed $382.20 and are only getting $370.73 after processor fees.  Therefore, I need to cough up an additional $11.47 out of my own profit  to make them whole.

So what's left?

$7,207.20 total paid
Less: 3% credit card fee of $216.22
--------------------------------------------
$6,990.98 in the till
Less: Sales tax of $382.20 (5.6%) on purchase price of $6,825.00
--------------------------------------------
$6,608.78 after sales tax paid
Less: Cost of Goods Sold of $6,500.00
--------------------------------------------
$108.78 profit

$108.78 / $6,500 = 1.67% profit margin from which to pay income tax, rent, cover utilities, pay for my FFL (Type 09 Destructive Device), SOT stamp, sales tax license, business licenses, insurance, etc.

Tacking on 3% credit card fees aren't just to soak you for more money.  It's to allow me to stay alive!

...and before somebody says that I need to charge more, I'll let you convince the customer to willingly pay me more when they can buy it online at the same price.  Sales tax free, too!  Barretts are heavy, so let's say the seller absolutely rapes the buyer for shipping and insurance to the tune of $200.00.  ($100 is fair, but whatever.)  They're still ahead $16.22 at the rape-level $200.00, and I had people demand I match Internet prices over a lousy .75 cents.

Mike

When you're only making 15 percent on the sale, a 3 percent credit card fee on the total sale is significant.

local brick and mortar stores don't charge CC fees because they're prices already include the CC fees and then some

my favorite local gun store has so much better pricing than Gander mtn, even 3% more is still 10% or more less than GM

Good explanation.  Thanks

Gas stations do this a lot. One price for cash, another for credit.It may not be 95% of places doing it, but it is common.

He explained everything right here except he forgot one thing.  Gun stores make money selling accessories for a higher margin to make up for low margins on guns.  However online stores (amazon, ebay, opticsplanet, etc) can sell accessories at cheaper prices while buying in bulk and accepting lower margins.  Gun stores have to either reduce their prices or not sell as much to compete which presents a lot of problems for them.

Another advantage online stores have is they can setup in low cost of business areas and market to the entire nation.  When ever I'm at gun shows or in stores, I see people looking at their phones comparing prices online.  I wanted to open a gun store in the high cost of doing business Hawaii, but looking long term I think it's a bad investment unless there's features like a gun range and training that can't be sold online.

Another similar thing is Gas Stations offer a discount for using their credit card.  Something a large corporation can do, but not feasible for a small gun store.

You guys have changed my mind about the whole thing after reading this thread.

Instead of being turned off by the fact of them acknowledging a credit card fee will be added we should be thankful we have the choice of a better cash price.

At least we are being made aware of it.

Absolutely true, but also not too helpful.  Let's say I sell some accessories.  I admit that I do MUCH better on those; sometimes a 100% margin!  Let's say the customer buys a cleaning rod, gag, brush, bore snake, patches, solvent, and oil.  Okay, so the $75 or so spent there brings in an additional $37.50 assuming I have a full 100% markup on everything-- before credit card fees and making up the government's loss on credit card fees, of course.    But to keep the math simple, let's say the customer paid cash for the cleaning products.  That brings my margin to a clean $37.50, which is 50% of that $75 in total.

$108.78 profit above + $37.50 cleaning stuff profit with the assumptions noted = $146.28 profit
$6,500 Barrett + $37.50 cleaning stuff cost = $6,537.50

$126.28 / $6,537.50 = 1.93% profit margin on the overall sale, which is an improvement from the 1.67% noted above.  

I'd agree that the accessories are helpful, but they're not meaningful.  Customers come to us for guns- everything else is just window dressing and "accessory" purchases to the main event.  Now, if you can find a guaranteed way to have customers always make accessory purchases equal the gun purchase price while keeping that 100% margin intact, I've got a free Barrett with your name on it!  

Mike

I'm in agreement that this one makes no sense at all.  If you're listing on gun broker, you're operating an internet based business and credit/debit cards and pay pal are the normal methods of payment.

I can understand refusing to use pay pal, but if a seller does not accept credit/debit cards, they need to just avoid on-line auctions entirely.  

The various comments about credit card disputes, credit card fees, etc don't hold any water.   Yes, you'll pay a 2.7% transaction fee, but you can pass that on to the seller, along with the $0.40 or $0.50 transaction fee, so the net cost to the seller is $0.

Credit card disputes can happen, but they are not a major issue.  Track the firearms you ship, ship to an FFL, require a signature, and have a clearly stated acceptance and return policy (i.e if it leaves the FFL, it's yours.  Period.) and you'll have no issues. Any disputes will be resolved very quickly and in your favor.  The fact that it's a gun transaction and the seller will be discriminated against by the evil liberals running the bank is BS.  The nature of the item sold has nothing to do with it because both parties are involved in a gun transaction. Besides, I don't find many liberals running banks.   They may not lend money to a firearms manufacturer, but that's to keep stock holders happy, and has no impact on credit card operations.  

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I do agree that avoiding taxes by requiring a money order to make it harder to trace income is probably one of the motives, but tax evasion is not limited to sellers demanding money orders.  For example if a seller rounds the credit card fee up to 3% (or in some cases 4%), the seller is now making a profit on the fee and needs to declare that as income. I really doubt that happens.   There are similar income and income tax implications on flat rate shipping fees, where the seller charges $35-$40 flat rate, and then gets it to you for maybe $25.  They need to report that $10 they did not spend on shipping as income, but again i suspect most don't even think about it.

My beef with sellers who accept a money order as their only form of payment is that I have absolutely no protection with the transaction.  The post office won't even start to investigate until 6 full weeks after the money order was sent, and then their investigation will stop on confirmation that it was cashed. If I had it tracked they'll confirm it arrived at the address.  The seller will of course claim the firearm was shipped and I have no way to prove that didn't happen.  The seller will claim it got lost or stolen in then mail, got misplaced by the receiving FFL, etc, all of which are plausible non zero probability events, so the post office will not take any action.  

It's on the seller to insure the item so it's beyond my control and even if the seller did insure the item, it's his responsibility to do the paper work needed to submit the claim and get reimbursed - then that money goes to the seller, not to me, so I'm then having to rely on the seller to reimburse me.  He can of course say, "sorry, the claim was denied" regardless of whether the claim was paid or even if he never bothered to submit a claim. Since I'm not party to the insurance transaction  the USPS, Fed Ex or UPS will not tell me whether the claim was paid or not.    

In contrast, if I pay with card and the item does not arrive, I can contest the charge within 60 days and I'll prevail, unless the seller can demonstrate the firearm was in fact received at the FFL with tracking and a signature.  


The worst thing a shooter can do to an LGS is go into a shop, look at and handle their firearms and then go buy the same firearm on line because a save $50 or $100.   When a shooter does that, he is using the LGS's show room, staff and inventory to make a sale for an on line retailer.  LGS's pay for what's in their store either when they order it, when it arrives, or best case on net 30 terms when it arrives.  Any way you slice it, it's costing them both money and potential interest to just sit there on the shelf for weeks or months until to sells. That shelf it sits on the staff helping you are also sunk costs.

If someone goes into a shop and looks at a gun, he or she at least needs to let the shop deal a bit on the price, and then the potential buyer needs to factor in shipping and transfer fees.  He or she also needs to consider how much it is worth to have it now, have a local gun shop stay in business and he there when/if you need their products and services, and keep his or her money circulating in the local economy.    

That's worth paying a little extra, provided the LGS holds up its end of the deal in terms of service and warranty support.

Who quoted you 5%?

Even in a large big box gun store the markup is rarely less than 15% over wholesale.  For a local gun shop the markup is usually around 35% on firearms, particularly harder to get and in demand items and the smaller ticket items will have a 50% to 100% markup.  Now, that's "markup", not "margin" as the shop has to still pay its brick and mortar expenses.

Now, if a shops is competing with Wal-mart, a 5% markup might be the reality, but most LGS's are not going to stock what Wal-Mart is selling for exactly that reason.

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Last time I checked Walmart was not selling Barrett .50s.  

And last time I checked not many gun shops are going to buy a Barrett .50 just to put it in the inventory in hopes it might sell.   It's more commonly going to be ordered because the shop has serious buyers they know are interested, or on a special order basis for a seller putting cash on the counter.   In those cases where a quick sale is expected a 5% make up actually isn't bad, especially on a $6500 item.

Most shops are also going to charge credit card fees on that large a purchase, so were really talking $325 clear after the sale.  That's not bad for a special order item and the time needed to do 1 NICS check and ring up 1 sale.  

If a local shop really is stocking high dollar guns with no buyers in sight and can only get a 5% markup over wholesale, that's entirely on the LGS.  They need to develop a better business model.

For dealers selling on GB it's dumb not to take cards. But private sellers shipping to your FFL may not want to deal with the hassle of setting up CC processing.

There are two problems with non FFL sellers on GB, GA, etc.

The first problem is that it's those non FFL sellers that pose the largest risk of not shipping the firearm once they've received the money order from you.

The second problem is that many of the local FFLs here will not receive guns from non FFLs.  In part its due to a stated reluctance to send a copy of their FFL to a non FFL for UPS or USPS purposes.  In part I suspect it is an intentional effort to make it harder for non FFLs to sell firearms through GB, GA, etc.

The shipping challenges and the payment challenges tend to force private sellers to sell through consignment with a local shop that then lists on GB or GA.

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As a buyer, I wont send an MO to a private seller due to the lack of buyer protection (been burnt once, won't do it again) so I don't bid on those auctions.   Similarly, I won't bid on firearms from dealers who won't accept credit cards based on general principle -  they are doing business over the internet, and they need to be willing to take electronic payment.

5% is what I found the market will bear for new long guns.  Sometimes I got lucky and could get up to 10%, but new in-production long guns generally don't sell for that much.  Wal-Mart, Dunham's, and (formerly) K-Mart used to be competitors, many times with their retail price beating my dealer wholesale price.  And while they didn't carry Barretts, GunBroker does.  

(Note: I am providing these as a point of reference, not to encourage or discourage doing business with these folks.)

$6,799:  http://www.gunbroker.com/item/632665617
$6,899:  http://www.gunbroker.com/item/633343854*

*Before anybody said "Wait, you only found two," Prepper Gun Shop has a pile of these at this price and has been selling them at this price for a year or more.  There are also two more Barretts at $6,900 each that have new uppers and lightly used lowers- I suspect Barrett refurbs.  I won't include them above because they're technically not NIB.

Why would any customer pay me $7,893.60 out the door, which is $7,475.00 on a $6,500 firearm at a 15% markup plus $384.60 sales tax when there are numerous online options for around $1,000.00 less and zero sales tax?  Sure, we need to add back $60-100 shipping and $20-50 for a "kitchen table" dealer transfer.  Still, what's the customer going to do-- and who can blame them?

Also, you answered your own question.  I offered this example to explain why I charged for credit cards, which was the OP's original question.  There's no way I could survive on an effective 1.67% profit margin.  

Finally, it's hard to run a gun store without inventory.  Dealers improve on things by offering a great used selection (always more profitable), handguns (a better mark-up), accessories (a great mark-up), and I tossed in Class III/NFA (a fair to excellent mark-up depending on the item).  Still, sometimes it means stocking some low mark-up items to attract clients.  Dealers just hope they buy other things too and refer their friends.  Now, one thing that helps margins-- stocking garbage.  You're right, the mark-up on high dollar guns is indeed low.  High Points, Masterpiece Arms, Cobra derringers, those knock-off Chicom double barrel shotguns, etc., all have excellent margins.  Is that all you want to see when you go to a LGS?  I can't speak for anybody else, but it's not what I want to buy when I go shopping.

But we've gone astray from the OP's original question- why do we charge additional for credit card use?  Here is the economic reason why many gun stores charge more for credit card use or offer a cash discount.

Mike

I don't know of any local dealers that don't take credit card, or wave the 3% the card processing service charges.  In the past, the very few who didn't take cards were the old-timers that shunned modern technology because they didn't trust it.  Nowadays every shop has cameras, at least one computer that's accessible from behind the counter to look up information, and handles CC transactions.