Guns and creditcard sales

Big Calhoun · Post by **Big Calhoun** » Tue May 08, 2007 2:08 pm

Anyone have any insight as to why gun stores charge extra to use a credit card when making a purchase? I have a feeling it has something to do with the charges related to processing...

seamusTX · Post by **seamusTX** » Tue May 08, 2007 2:19 pm

All stores pay a percentage of credit-card sales to the credit-card issuer or an intermediate broker. Small stores are not able to deal directly with banks (they need a minimum monthly sales), so they have to use brokers who charge up to 7%.

Using a credit card also means the seller has a paper trail and must include the revenue on their tax return. I'm not saying anyone cheats on their taxes, but I've had vendors offer me a cash discount.

- Jim

Mike1951 · Post by **Mike1951** » Tue May 08, 2007 2:39 pm

Actually, from my experience, most gun 'stores' don't charge the penalty.

But we go to gun shows, expecting to find the absolute best deal in a market that already has a thin profit margin. This is where most of the credit card surcharges appear.

Mastercard and Visa usually have the lower rate with American Express a couple of points higher. Not sure about Discover.

In another thread it was discussed what happens when you challenge them on their policy of charging more for credit card sales. Even though they are not allowed to do so, the response would probably include "take a hike".

I find I can get prices in line with gun shows at Tomball Pawn and they never charge the surcharge. So if it's an issue for you, then shop till you find a dealer than doesn't penalize credit card use.

But at shows, it's best to accept it as a fact of life. Buy or not, don't expect to change the dealer's policy.

ccoker · Post by **ccoker** » Tue May 08, 2007 3:00 pm

like the others said, it's to cover the cost

I own my own business.. so, here are some examples

average percentage is around 3%
so, a 500 sale costs the dealer about 15 bucks to process
most gun dealers are seeming to sell around 10-15% above cost
so, if a gun sales for 500, it cost him around 450, leaving him with a $50 profit for the deal, remove 15 for the transaction fees and now it's 35 bucks "profit"
he still has to cover overhead, etc..
and if there's tax involved, he pays 3% on the total sale!

now, most debit cards only charge like 25 cents per transaction, not a percentage

that's why most merchant checkout prompt you for a debit purchase

when I deal with small businesses and I had them my card, they usually ask debit or credit?. I respond, "whatever is better for you"
because it makes me no difference as it sucks it out of the same account

fadlan12 · Post by **fadlan12** » Tue May 08, 2007 6:26 pm

It is actually against the rules for merchants to pass the charges along to you. If you were charged by a online vendor (or any merchant i.e. best buy) you could call amex or B of A or whoever and they could lose the priv to accept these sales. This is the aggreed cost for accepting credit card sales.

Having said that I would not make that call, most times its still cheaper than buying local. and you don't have to shop there.

****Mike1951 covered this already***

ccoker · Post by **ccoker** » Wed May 09, 2007 10:28 am

it is against the rules to tell the customer he'll get it cheaper for cash, therefore bybassing the credit card processor's profit

it's a "rule" made up by the merchant services industry to protect their interest...

it's definitely factored into the pricing of stuff...

Mike1951 · Post by **Mike1951** » Wed May 09, 2007 2:18 pm

ccoker wrote:it is against the rules to tell the customer he'll get it cheaper for cash, therefore bybassing the credit card processor's profit

Actually, it is allowable to advertise a cash discount and a few gun show dealers do.

But the merchant then has to price his goods based on the presumption that the sale will be a credit card sale. That is extra work and confusion, not to mention making him not competitive with other dealers pricing.

Big Calhoun · Post by **Big Calhoun** » Thu May 10, 2007 2:12 pm

Thanks for the info!! I asked because I've been considering a business idea: micro-payments. Say you want to take credit cards but don't want to pay the transaction fees and/or may not generate enough transactions to cover the fees.

Well, with a micro-payment setup, multiple vendors share the same subprocessor who then sends them to the main processor. So Ted, Ed, and Jed may generate only $50 in credit card sales a day. Rather than submit those small transactions individually, they would all be processed together and the processing fees would be lower per business. Theirs a lot of other techicalities to it but figure it's something that can only help.