What’s worse than paying more for something than you have to? For firearms businesses, this problem is all too common. Banking fees are a normal and routine part of running any kind of business, but this cost can be significantly higher for those operating in the firearms industry. This is often due to the narrative that gun shops are high-risk, turning banks away from partnering with them and offering payment solutions. As a result, once gun shop owners do find a payment processor to work with, they are hit with inflated fees that make the partnership extremely expensive.
Common types of fees to look for:
- Monthly Maintenance: Banks oftentimes charge fees for maintaining their relationship with gun shop owners. If you are planning to have a long-term relationship with a bank, you might experience higher fees for being deemed a high-risk industry.
- Transaction Fees: Every time your customers make a purchase, you might get hit with a transaction fee. These can be very steep for high-risk industries such as gun shop owners.
- Early Termination Fees: When you do find that it is time to switch payment processors, your bank may charge a fee to terminate your contract before it is set to end.
- Other Fees: Banks can also tack on extra charges for things such as compliance support, which is something critical to the firearm industry. Exceeding transaction limits or facilitating wire transfers may also cost your business more.
How This Can Impact Your Bottom Line
While these charges may be small, they can certainly add up over time and impact your bottom line. On average, it is not uncommon for gun shops to spend over $2,000 annually on banking fees alone before any other business costs are factored in! For a small or medium-sized business that is just starting out, this can be a heavy hit on your bottom line. This money could instead be used for marketing, employee wages, or shop improvements to increase customer reach.
Why Do Gun Shops Face Higher Banking Costs?
The firearms industry operates under stricter regulations than typical businesses. This extra oversight for banks can translate to higher banking and processing costs for reasons such as:
- Risk: Perceived risk can be a major factor here. Banks view firearms businesses as high-risk due to the legal issues that can arise if shops do not operate within compliance.
- Regulatory Issues: Gun shops must comply with FFL regulations in order to operate legally. Banks must audit these businesses more frequently and conduct compliance checks to ensure nothing is being missed.
- Reputation Problems: Banks may be hesitant to work with gun shops due to cultural, social, or political norms that can cause their organizations to seem controversial. Thus, they charge these partners more to do business with them.
- Fewer Partner Options: As fewer banks are willing to work with FFL holders, gun shops are left with minimal choices to partner with when looking to work with a payment processor. As a result, they will have less negotiating power when it comes to fees, too.
How You Can Cut Your Banking Fees by 62%
Now let’s get into the meat of this article – how exactly can you cust your banking fees by 62%? The key to this reduction is to be as proactive as possible and do your research on financial providers who support your business. A few key points to look at are:
- Choosing a Bank That Supports Your Business
Selecting a bank that supports the second amendment rights and the firearms industry is a great way to set your relationship up for success. Examine how actively banks welcome FFL businesses and see if they have a history of working with gun shops before proceeding. Banks with this type of history are also less likely to hike up fees for working with them!
- Payment Processors
Payment processes often penalize gun shop owners for being high-risk by hitting them with high transaction fees. Working with a payment processor that is used to working with these types of businesses can be better suited to support the growth of your organization.
- Transactions Rates
Transaction fees are a big expense for gun shop owners, so don’t be afraid to negotiate for the sake of your bottom line! This is especially important if you have a large client base and process sales on a frequent basis.
- Avoid Hidden Fees
Before signing anything, read the fine print of each and every contract your bank presents to you. Be aware of any additional fees you may be subject to for exceeding transactions, terminating your contract early, or processing large sales. Transparent pricing says a lot about a business!
- Modern Technology
Look for a processor that uses modern technology to get the job done. This can reduce possible errors in your payments and provide additional convenience for clients. Mobile payments, tap-to-pay, and integrated processing are the way to go!
BKW Servicing – The Go-To Solution for Gun Shops
BKW Servicing specializes in finding the best financial solutions for businesses operating in the firearms industry, as we understand the unique challenges that organizations in this space face. Staying compliant while increasing your bottom line should not be put on the back burner. BKW is proud to offer competitive rates, transparent pricing, FFL expertise to keep your business compliant, and integrated solutions your customers are sure to love.
Don’t let high banking fees eat into your bottom line. Partner with BKW Servicing and take back control of your gun shop’s finances!
