PayPal and the Gun Industry – What You Need to Know
Updated: May 4th, 2023
Operating a business in the firearm industry even if you don't sell guns, comes with complications and risk. This article is part of a series of articles I'm publishing about various online platforms, merchant providers, and tools that have policies related to the firearm industry.
PayPal is a merchant provider that enables small businesses and helps them accept credit card payments online in a secure way. In addition to being its own payment gateway and merchant provider, PayPal also has the benefit of being an online bank where you can keep a balance. You can get a PayPal debit card, send money to/from other PayPal users and transfer funds back and forth with other bank accounts.
Table of Contents
What Is PayPal's Gun Policy:
“You may not use the PayPal service for activities that: relate to transactions involving … ammunition, firearms, or certain firearm parts or accessories, or (k) certain weapons or knives regulated under applicable law.”
Not exactly specific is it? Virtually everything my business sells MIGHT fall into their list of prohibited items. Or it might not because who is to say WHICH certain firearm accessories are on the PayPal naughty list?
I called PayPal. They were unable to provide me with a list. I was told explicitly that “holsters, bags, and tactical gear” are all ok. Many years ago I also had a PayPal representative explicitly tell me firearm training and classes are ok. Beyond that nobody knows. I'm not even sure if PayPal knows from one day to the next what is prohibited.
In January 2023, I was proactively contacted by a PayPal “account representative” named Jeremey who wanted to meet to discuss how I could better grow with their platform. I saw it as a sales call to get me to use more of their services. Over the next 2 months, a lot of back-and-forth emails, and 2 video calls, Jeremy was unable to provide me with even an ounce of clarity on their policy.
He eventually asked me to email [email protected] which presumably is their compliance team. I copied Jeremy on that email but the compliance team wasn't even willing to respond to my email. Not even when their own employee replied all and asked for a response. Just 100% ignored which leads me to believe that PayPal not only doesn't have any clue what their own policy means but they also have really bad customer service.
The most troubling thing is the lack of consistency. I know several businesses that only sell training classes and have had PayPal delete their account. I know at least one company that only sells holsters and yet PayPal froze their account.
Further, they don't seem to be educated enough to enforce their own policies. For example, they restricted my company's account because of a transaction for “dummy ammo.” Dummy ammo is very obviously not ammunition and is in fact a safety product that renders a gun safe but even after a phone call, PayPal's compliance team couldn't reconcile the possibility that anything with the word ammo wasn't against their policy that prohibits ammunition.
What Can You Expect From PayPal:
An important clarification you need to note about PayPal. Different from other merchant providers; when a customer places an order on your website and checks out using PayPal the list of items by title, that make up that order, is sent to PayPal.
If someone purchases a holster on my website and pays with a traditional credit card merchant that merchant provider will only get an order number or whatever I've programmed for them to receive. Something like “Concealed Carry Inc Order #5555555. PayPal on the other hand will get the exact title of the holster being purchased. In my opinion, this level of data transfer to PayPal is a HUGE privacy concern for my business and our customers.
PayPal appears to conduct audits from time to time on accounts looking for keywords against a “naughty list” of keywords. Since the actual product names show up in a PayPal transaction this is something they can do.
*Note: Based on my interviews with companies who have dealt with these issues as I have, I suspect that PayPal might only conduct these audits on accounts that either have high balances or a volume of activity that is higher than normal for that account.
PayPal has different types of account restrictions they can apply. If for example, they see just one product you sell that is in violation of their “policy” they might put a restriction on your account only until you remove that product and stop selling it. However, if they think your core business is fundamentally in violation of their policy they might fully delete your account.
Is there an appeal process? Not really. You can try contacting PayPal customer support via phone and get a supervisor on the phone but their ability to help you is very limited. They can't tell you what is or isn't prohibited and at best they can “add notes to the account for the compliance team to review” but that isn't likely to have any impact on anything.
If your account has recently been restricted I suggest you do whatever they request in order to be compliant. My rule of thumb is to always play by their rules to avoid potential issues.
What Are Your Options – Should You Leave PayPal?
This is a difficult one. As a general rule, I prefer to not work with companies that don't have clear rules or a way to appeal when you feel you have been restricted regardless of following those rules.
Sadly however PayPal isn't just another behind-the-scenes merchant provider that will process a credit card charge. They have worked hard to build a brand that many consumers equate with trust and security. Customers like PayPal because they feel it is more secure than giving their credit card info to some random website.
As a large eCommerce company that processes millions of dollars each year on our website, we have the opportunity to conduct experiments in real time with a substantial amount of traffic. Those experiments have shown that offering PayPal as an option at checkout increases the conversion rate by about 10%.
Thus removing PayPal as an option would be the last resort that would almost certainly cost us as much as tens of thousands of dollars each year in gross revenue.
My Suggestions to Any Firearm Industry Company Relating To PayPal:
- If you sell guns, ammunition, knives, or firearm parts that replace OEM parts on a firearm I strongly suggest you do NOT use PayPal. Perhaps on the checkout page, you put a note to the effect of “We do not offer PayPal as a checkout option because PayPal specifically prohibits the sell of our products on their platform.” Such a statement might lessen the negative impact of your conversion rate.
- If you think your business fully complies with PayPal's policy you need to acknowledge the possibility that at any point they may choose to shut you down. There may not be any rhyme or reason. Just expect it as an eventual inevitability.
- Setup a dedicated bank account to tie to your PayPal account. This is valuable for a number of reasons. First, you limit PayPal's access to all the funds in your business's primary bank account. Second, if your account gets shut down and you decide to open a new PayPal account you will be unable to do so using a bank account previously connected with a PayPal account that was restricted or shut down.
- Maintain a low balance. Pick a balance number that is appropriate for your business that you want to maintain there for whatever working balance reasons and frequently transfer anything over that dollar amount out of PayPal. I suggest that working balance never be more than $2500.
- See if there is a way with your eCommerce solution to restrict the data being sent to PayPal or even block certain products from being paid for with PayPal. Perhaps you too sell dummy ammo and don't want to trust PayPal compliance officers with knowing the difference.
- On your website, if you accept PayPal, you should be able to add a note on the checkout page to the effect of “While we do accept PayPal to meet the demands of many customers please note we don't recommend paying with PayPal. PayPal will receive all the data about the products you are purchasing which we feel is an invasion of your privacy. Further, PayPal has proven to be against the second amendment and we don't suggest patronizing companies that don't respect your constitutional rights.”
This is exactly why Bitcoin exists. It’s completely permissionless. A bitcoin transaction either meets the clear protocol rules, and goes through, or it doesn’t. There is no morality or political censorship imposed. Every serious gun owner (or advocate for any other basic right) should support bitcoin. Every business that supports liberty should accept bitcoin. No, it won’t add 20% to the bottom line overnight. But it’s a clear statement that PayPal (or banks or credit card companies or merchant processors or anyone else) isn’t the last word on what we can buy with our own money.
Added the notice to our online store. Thanks!
Although PayPal doesn’t provide much warning that it prohibits guns, it is actually following an industry-wide practice. All the payment platforms prohibit guns, including Venmo, Square, Stripe, and Zelle. Here is a complete list with sources: [link removed]
I understand that Dan. I can work with a company that has clear rules and follows them. My issue is that they don’t have clear rules and don’t follow their own rules. PayPal says you can sell holsters but they have shut down accounts for selling holsters. PayPal says you can sell firearm training but they have shut down accounts for selling training.
It is past time for Americans to make businesses feel some financial pain when they promote attacks upon our U.S. Constitution. PayPal seeks to restrict our 2nd Amendment rights in America.
We must demand election integrity in all elections! Military tribunals for those who commit treason against our nation.
Hurrah for PayPal taking a stand against firearm purchases. Any why shouldn’t they? How can they confirm a minor isn’t purchasing the gun? They can t! Thank goodness for their stance – refusing to let guns be sold through their site is not only lawful but should empower more companies to stand up to the greedy companies who profit off of gun sales without regard to the lives that are lost to gun violence that is increasing every year. Assault rifles should be absolutely banned from being manufactured in America. What is the use of this kind of weapon with the capability to mow down a crowd of people in a blink of an eye? Who would use an assault rifle to hunt? A coward, that s who. Stand up to the NRA bullies. End the insanity that is the number 1 cause of deaths among our children now.
PayPal is welcome to have any policy they want. I would appreciate if they actually communicated clearly what their policy is instead of using vague language and refusing to answer questions. I would also appreciate some degree of consistent enforcement but instead they willy nilly make stuff up as they go which may or may not be in line with their policies. Though I am confused by your statement. It is illegal to sell a handgun to a minor. That an existing law. So PayPal doesn’t need to have a policy against it. And having a policy doesn’t protect their platform from being used for illegal transactions. What is to keep someone from paying for drugs, guns, or other potentially illegal things via PayPal? Nada. You don’t have to put any information into PayPal when you send money from one user to the other. So I don’t find their policy at all helpful in achieving the objective you find so important. They choose to not allow legal transactions and you think that somehow helps them prevent illegal transactions? If they were willing to work with gun companies who sell guns that would be as safe a thing as possible since gun companies not only can’t sell guns to minors (because its illegal) but they have to make buyers fill out paperwork and they have to verify ID, and run the buyer through a background check. So, transactions for guns, from actual businesses in the business of selling guns are about the most guaranteed legal transactions you could possibly count on. So you comment about how they could confirm a minor isn’t purchasing the gun is irrelevant because the vendor is required to verify the customer isn’t a minor and there is a massive amount of red tape in place to enforce that law. Can you show me even one example of a minor ever buying a gun from a gun store? It can’t happen. If PayPal really wants to make sure its platform is never used for illegal transactions its best course of action would be to block all private transactions between PayPal accounts and only work with businesses who are licensed and legally operating. Of course they know all that so their policy has nothing to do with keeping guns out of the hands of minors.
Educate yourself on the matter.
Even if one purchases a firearm from an online gun store through PayPal, that needs to be transferred to a FFL, and that FFL will run a background check with the person’s ID. Guess what the FFL does if the person is clearly underage?
I’m also confused by your statement about what you call “assault rifles.” It sounds like you’re arguing that machine guns, or in other words, fully automatic weapons, should be illegal? Which you may be surprised to hear that they are in fact, illegal. No modern machine guns may be purchased and older fully automatic weapons may only be purchased by individuals with a license to do so, and these weapons are tracked very closely by the ATF. I know of no mass shootings that have been committed with one of these weapons.