Key Differences Between Regular and Firearm-Friendly Merchant Accounts

Getting paid should be simple. But if you sell firearms, ammunition, or tactical accessories, your payment stack lives under a different set of rules than a typical retailer. 

This long-form guide breaks down the true, practical differences between regular merchant accounts and firearm-friendly merchant accounts—from underwriting and gateways to MCC 5723, chargebacks, shipping, and state-by-state wrinkles. 

It’s written for U.S. businesses and reflects current developments so you can build a compliant, scalable payments program that won’t collapse the first time volume spikes or a policy changes.

What a Merchant Account Actually Is—and Why Firearm-Friendly Merchant Accounts Are Different

A merchant account is a financial arrangement with an acquiring bank or payment facilitator that lets your business accept electronic payments. 

With a regular merchant account, the processor underwrites your industry as “standard risk,” maps your business to a Merchant Category Code (MCC), and lets you accept cards and (often) ACH. Risk controls are generic: AVS, CVV, fraud screening, and standard chargeback workflows.

A firearm-friendly merchant account is underwritten as regulated/high-risk. That doesn’t mean your business is unsafe; it means the acquiring bank faces additional compliance, reputational, and regulatory obligations when it sponsors your transactions. 

The underwriting package goes deeper (e.g., licensing, inventory, shipping practices, policies), risk controls are tighter, and card-network classification (MCC) can be different from general sporting goods. 

The gateway often includes industry-specific tools (age checks, FFL validations, order-flow controls) that regular merchant accounts don’t need.

Why the extra attention? In firearms commerce, the transaction context (who is selling, who is buying, where the item ships, and whether transfer occurs via an FFL) matters as much as the dollar amount. 

That context drives suitability, disputes, and legal exposure. A firearm-friendly merchant account folds that context into underwriting and monitoring so you can keep processing without constant suspensions.

The Regulatory Backdrop: FFL Licensing, NICS, and New Rules That Touch Payments

If you sell firearms as a business, you generally need a Federal Firearms License (FFL) and must comply with ATF regulations, including accurate records, Form 4473, and lawful transfers. The ATF’s FFL Quick Reference and Best Practices Guide lays out core obligations and emphasizes compliant transfers and record-keeping.

Background checks occur through the FBI’s National Instant Criminal Background Check System (NICS). While processors don’t run NICS, your order flow and transfer procedures should be designed so that a background check occurs at the FFL before the buyer takes possession. 

That handshake between eCommerce and the brick-and-mortar or receiving FFL is a defining attribute of a firearm-friendly merchant account’s setup.

In April 2024, the U.S. Department of Justice finalized a rule to close the “gun show/online” loophole by requiring more sellers who are predominantly in the business to become licensed and perform background checks, expanding who counts as a “dealer.” 

This change increases the population who must operate like traditional FFLs—even if they primarily sell online or at shows—raising the compliance bar for payment providers underwriting these merchants.

For private-party sales facilitated by an FFL, ATF guidance clarifies that the same rules apply: the buyer completes Form 4473, the licensee completes their section, and a NICS check proceeds. 

If your business model includes FFL-facilitated private transfers, your gateway and descriptor management must reflect that reality to prevent support confusion and disputes.

MCC 5723 and the Politics of Card Acceptance: What Regular vs. Firearm-Friendly Accounts Must Know

Merchant Category Codes (MCCs) classify businesses for card networks. For years, many firearm retailers processed under 5941 (Sporting Goods) or similar. In September 2022 the ISO approved a new, firearms-specific MCC. 

Card networks acknowledged the standard but slowed rollout due to conflicting state laws and operational complexities. Visa explained it paused adoption where state legislation conflicted with global standards.

By 2024–2025, states began to mandate or restrict the code. California and Colorado required implementation; New York followed with legislation and phase-in dates. Public summaries note that in New York networks had to make the code available by Nov 1, 2024 and assign it by May 1, 2025. 

Bank of America’s merchant help page confirms MCC 5723 for “Guns and Ammunition” and says it’s used where legally required—currently CA, CO, and NY—as of May 1, 2025.

The upshot: regular merchant accounts rarely face MCC politics. Firearm-friendly merchant accounts must place (or be prepared to place) MCC 5723 where mandated, and remain flexible outside those states because several jurisdictions have tried to prohibit firearm-specific MCC use, creating a patchwork that confuses unprepared acquirers. 

Reputable processors monitor this actively to avoid category mis-coding that could trigger compliance reviews or settlement holds.

Underwriting Depth: What Firearm-Friendly Merchant Accounts Verify That Regular Accounts Don’t

Underwriting for a regular merchant account evaluates business identity, chargeback exposure, delivery timelines, and basic KYC/KYB. Firearm-friendly underwriting adds industry-specific proofs:

• FFL status and match to business legal entity, plus license class/locations.
  
• Merchandise scope: firearms vs. frames/receivers vs. parts and accessories.
  
• Transfer flow: in-store pickup or shipment to an FFL only; no direct-to-consumer interstate firearm shipments.
  
• Operational policies: age restrictions, ID verification, return/refund specifics for serialized items, and order cancellation policies tied to failed background checks.
  
• Website controls: disclosures, prohibited items list, restricted-state logic, and checkout enforcement.

This depth is not bureaucracy—it’s risk alignment. A processor that understands your ATF-compliant flow reduces surprise audits and keeps your firearm-friendly merchant account live during news cycles or policy chatter that can spook generalist acquirers.

Risk & Fraud Controls: Why “Standard” Settings Don’t Cut It for Firearms

A regular merchant account typically runs card-not-present with AVS/CVV, velocity checks, and a generic fraud model. Disputes revolve around non-delivery or quality. In a firearm-friendly merchant account, your risk posture changes:

• Pre-authorization logic often holds funds until the FFL transfer is complete or the firearm is set at the receiving FFL.
  
• Descriptor strategy should flag “FFL Transfer Required” on confirmations and receipts to reduce “Item Not As Described” or “Service Not Provided” claims.
  
• Negative-file and watchlist screening for repeat abusers, combined with velocity guardrails by SKU group (e.g., ammunition vs. serialized items).
  
• Gateway rules to deny direct shipments to residential addresses for firearms, enabling them only for accessories and apparel.
  
• 3-D Secure can be valuable on higher-ticket items, trading a tiny approval impact for dispute-liability benefits.

Because firearms merchants operate in a heightened compliance space, acquiring banks expect risk-based controls similar in spirit to OFAC’s guidance across payments: tune controls to the risk, validate effectiveness, and document your program. Processors with mature sanction-screening and risk programs internalize that approach.

Payment Methods: Cards, ACH, and Real-Time—With a Compliance Lens

Regular merchant accounts freely enable cards, ACH, wallets, and sometimes instant payout rails. For firearm-friendly merchant accounts, method enablement is more contextual:

• Cards remain primary for retail and eCommerce, with MCC requirements in certain states. Expect card brand rules, higher scrutiny, and occasional reserve or rolling-cap policies compared to general retail.
  
• ACH can be attractive for ammo or accessory subscriptions and larger tickets. But your provider should implement risk-based OFAC screening across ACH flows, as emphasized by both OFAC and industry guidance, to avoid false positives while maintaining compliance.
  
• Instant payouts to your business bank account may be available but can be conditioned on clean dispute ratios and validated FFL/logistics patterns.

If you operate marketplaces or accept funds on behalf of others, you may drift into MSB-like risk expectations. Even if you’re not an MSB, exam manuals for payment processors highlight enhanced AML expectations for third-party processing—something firearm-friendly acquirers already build into their oversight.

eCommerce Order Flow the Right Way: FFL Transfers, 4473, and Shipping

For firearms sold online, a compliant flow routes the serialized item to a receiving FFL, not directly to the buyer. The buyer completes ATF Form 4473 and the transfer occurs only after a background check and lawful approval. 

Your cart should collect the FFL details, provide the FFL a copy of your license if needed, and prohibit checkout until an eligible FFL is selected. The ATF’s guides reiterate that licensees must handle records and transfers consistently with federal law, including for facilitated private sales.

A regular merchant account doesn’t need cart logic to block direct residential shipment of regulated products. A firearm-friendly merchant account does—and your processor will expect to see it. 

Email templates and on-site messaging should explain the FFL step, expected timelines, what happens if NICS delays/denies, and how refunds are processed minus shipping or restocking where allowed. The clearer your front-end, the lower your chargeback risk.

Pricing, Reserves, and Payouts: Why Firearm-Friendly Accounts Can Cost More

Card-not-present gun retail carries higher perceived regulatory and reputational risk than standard eCommerce, plus higher average tickets and complex fulfillment. As a result, firearm-friendly merchant accounts may come with:

• Slightly higher discount rates and authorization fees.
  
• Rolling reserves or capped daily settlement until performance data accumulates.
  
• Stricter chargeback thresholds and remediation timelines.

Regular merchants typically negotiate with just volume and seasonality in mind. Firearm merchants negotiate with volume and compliance posture. 

Demonstrating clean FFL workflows, documented policies, and a low dispute rate from a prior processor helps you win better pricing—very similar to how financial institutions apply risk-based controls per OFAC/FFIEC guidance.

The Gateway Layer: Tools Firearm-Friendly Merchant Accounts Need and Regular Accounts Skip

A modern firearm-friendly gateway adds industry-specific enforcement:

• FFL lookup/validation at checkout.
  
• Address rules that allow firearms only to FFLs, while accessories can ship to residential addresses.
  
• State-by-state blocking for restricted SKUs.
  
• Age verification and strengthened KYC signals for BOPIS (buy online, pick up in store).
  
• SKU group controls (serialized vs. non-serialized) that affect authorization amounts, capture timing, fraud thresholds, and refund routing.
  
• Descriptor logic and automated communications that reference FFL transfer requirements.

These features reduce disputes and align with ATF and background-check realities. Regular merchant accounts rarely need such workflow-level controls, which is why generic processors often mis-classify firearm merchants and later freeze funds when an audit hits.

State-by-State Patchwork: How It Changes Your MCC and Processor Expectations

As of mid-2024 into 2025, states diverged on firearm-specific MCC requirements. California became the first to enforce the code; Colorado followed; New York enacted timelines requiring availability and assignment by May 1, 2025. 

At the same time, some states moved to prohibit firearm-specific MCC usage, leaving card networks to juggle conflicting mandates. Processors with firearm-friendly programs maintain playbooks by state to keep you live and properly coded.

Visa publicly noted the regulatory uncertainty and paused broad adoption where laws conflicted. Meanwhile, lawmakers at the federal level argued both for enforcement and for prohibitions, illustrating why merchants need a processor that actively tracks this debate instead of reacting after a narrative shift. 

Regular merchants don’t face this MCC whiplash; firearm merchants do—and your account type should reflect that.

Brick-and-Mortar vs. Online FFLs: Same Firearm-Friendly Account, Different Controls

In-store FFLs primarily need robust POS, PIN debit, and strong ID checks. They also benefit from EMV fallback policies, clear decline messaging, and automatic prompts for age verification on restricted SKUs. Disputes often involve warranties or defects, which your return signage and receipts should address.

Online or hybrid FFLs rely on gateway enforcement: FFL address selection, shipment routing, delayed capture until transfer, and strict refund logic for failed background checks. Your firearm-friendly merchant account will likely underwrite both channels together with risk profiling by channel, while a regular account wouldn’t segment risk this way.

What Processors Evaluate When You Apply for a Firearm-Friendly Merchant Account

Expect to provide:

1. Corporate details (EIN, ownership, operating history).
   
2. FFL documentation matched to legal entity and locations.
   
3. Product matrix (serialized vs. parts, accessories, ammo).
   
4. Policies: shipping, refunds, age verification, FFL transfers, restocking fees.
   
5. Website evidence: checkout enforcement, disclosures, restricted-state handling.
   
6. Volume forecast and seasonality (e.g., hunting season spikes).
   
7. Dispute history and processor statements if switching.

If you facilitate private-party transfers, include that workflow. ATF resources specify how such transfers must be treated, which your processor will mirror in risk review.

Migrating From a Regular Merchant Account to a Firearm-Friendly One (Without Sales Disruption)

If you’re on a regular merchant account today and sell only accessories or apparel, growth may push you toward firearms or frames—and a firearm-friendly merchant account. Plan your move:

• Audit your site to ensure firearms can’t ship to residences and FFL selection is mandatory for serialized items.
  
• Tune your policies: spell out FFL transfer steps, background check outcomes, return rules, and timing for capture/refund.
  
• Prepare MCC readiness: if you operate in CA/CO/NY, be prepared for MCC 5723 assignment; outside those states, your processor should advise how to code without creating friction in prohibiting states.
  
• Stage the cutover during a softer sales window, and monitor approval rates, declines, and refund reasons daily during the first two weeks.

Done correctly, customers feel no pain—and your risk metrics look cleaner than before.

Chargeback Playbook: How Firearm-Friendly Accounts Reduce “Unfair” Losses

Disputes in this vertical often stem from process misunderstandings rather than fraud. A strong firearm-friendly setup preempts them:

• Confirmations that state “Shipment to FFL Only—No Direct Home Delivery”.
  
• Proactive emails to buyers and receiving FFLs with order IDs, contents, and required IDs.
  
• Delayed capture until shipment is received by FFL, or until the transfer occurs.
  
• Evidence packages that show the buyer acknowledged FFL transfer terms and state law compliance.

Regular accounts don’t need this precision. Firearm-friendly accounts embed it so that issuing banks see clear, lawful fulfillment, which helps you win representations and keep ratios under card-brand thresholds.

Compliance Documentation: Keep It Current and Organized

Maintain a living binder (digital is fine) with:

• FFL license(s) and renewals.
  
• ATF inspections or correspondence.
  
• Policies for shipping, FFL transfers, returns, age checks.
  
• State lists for restricted SKUs and MCC mandates.
  
• Training records for staff on ID verification and denial handling.

This mirrors the risk-based approach regulators encourage across payments—document decisions, review controls, and adjust as the legal and network environment shifts.

FAQs

Q1) Is MCC 5723 required everywhere for gun and ammo stores?

Answer: No. As of 2024–2025, California and Colorado mandated implementation, and New York set dates requiring networks to make the code available by Nov 1, 2024 and assigned by May 1, 2025. 

Other states have restricted or prohibited firearm-specific MCCs, so implementation varies. A firearm-friendly processor will code you properly by state.

Q2) What’s the actual code number for firearm retailers?

Answer: Industry sources and bank documentation show the firearms MCC as 5723, labeled “Guns and Ammunition,” used where legally required (e.g., CA, CO, NY).

Q3) Do I need an FFL to accept payments online?

Answer: If you’re engaged in the business of selling firearms, you generally need an FFL and must complete transfers through an FFL with Form 4473 and a NICS check. A firearm-friendly merchant account is underwritten with those steps in mind and expects your site to enforce FFL shipment/pickup rules.

Q4) Can I ship a gun directly to a customer’s home if my processor approves it?

Answer: No. Federal law requires firearm transfers to occur through an FFL with appropriate checks. Your processor cannot override federal requirements; a firearm-friendly account instead enforces FFL shipping and transfer in the gateway.

Q5) Why do firearm-friendly merchant accounts sometimes have reserves or higher rates?

Answer: Higher perceived risk (regulatory scrutiny, average ticket size, potential PR exposure) leads acquirers to hold reserves until performance data proves stable. That aligns with broader risk-based controls common across payments compliance.

Q6) I sell only accessories and apparel. Do I still need a firearm-friendly account?

Answer: Maybe not. Many regular merchant accounts can underwrite non-regulated accessories. But if you plan to add serialized items or frames/receivers, migrate early to a firearm-friendly merchant account so your cart and policies are ready before launch.

Q7) How do evolving state laws affect me if I sell nationally online?

Answer: Your processor should track where MCC 5723 must be used and ensure coding complies per state. Clear checkout logic keeps your operation consistent even when the legal landscape shifts. Visa’s public statements note the complexity created by conflicting state laws.

Q8) Do ACH payments change my compliance obligations?

Answer: The rails differ, but the principle is the same: apply risk-based OFAC screening and keep clean records. A firearm-friendly provider will tune screening to reduce false positives while meeting obligations.

Q9) What if I facilitate private-party transfers?

Answer: ATF treats FFL-facilitated private sales like any other transfer: Form 4473 and NICS apply. Your payment flow, confirmation emails, and refund policies should reflect that process.

Q10) Will using MCC 5723 “track” individual items I sell?

Answer: MCCs identify merchant type, not line-item SKUs. Public reporting and card-network statements have noted that the code doesn’t list specific products purchased; it flags that spending occurred at a gun store. 

States have responded differently—some mandating, others restricting use—so work with a processor that implements MCCs appropriately without exposing item-level data.

Conclusion

If you sell apparel or optics only, a regular merchant account might serve you for years. But if you sell firearms, frames/receivers, or ammunition—or plan to—the smarter path is a firearm-friendly merchant account that bakes compliance and risk controls into your stack.

The differences aren’t superficial. Firearm-friendly accounts align underwriting to your FFL credentials and workflows, enforce FFL shipping, incorporate age and state restrictions, prepare for MCC 5723 where required, and document a risk-based program consistent with today’s regulatory expectations. That’s how you avoid emergency shutdowns, prolonged funding holds, and dispute headaches.

As the regulatory and card-network landscape continues to evolve—California and Colorado enforcement, New York timelines, and other states moving in both directions—your best protection is a processor that treats firearms as a specialized, compliant vertical rather than a generic add-on. 

Build the right foundation now, and your firearm-friendly merchant account will keep you selling, shipping to FFLs, and serving customers—without the payment drama that derails unprepared merchants.