I, also, do as Mike does. I keep transfer rates low, the same as he does. It's definately free money. I also advertise on my cards, fliers, and my sign at the bottom of the driveway that I accept internet sales. I charge a fair fee plus the transfer fee. Again. free money.
Knowing which distributors don't accept fax check or ACH debiting and charge me for using plastic to fill orders, I can add the upcharge they charge me to the cost of the gun on quote to the customer. When you're making 10-15% on average, the 2-4% can eat significantly into your meager profits to begin with. People don't know that the lion's share of the cost of a gun is there before it gets to the retail level. And, yes, it's cheaper and less hassle than COD.
Here's something that I managed to do even as a little guy. I'm not afraid to approach people. I started out talking to a couple reps when the NRA conference was here in '10. I now have factory direct dealings with four manufacturers where I can order single units and get them factory fresh, no additional charge for using plastic to order. One of them even dosen't charge shipping. They're not Smith & Wesson or anything like the most major manufacturers, but they're up and coming companies and I'm glad to be associated with them. What I'm trying to get across is it often pays off to network anywhere the opportunity presents itself. I'm also the only game in town in my entire area that offers polymer AR lowers from one of the major US manufacturers. For a while there, I was shipping them all across the country, from Seattle to Florida. The demand has slacked off unfortunately, but still it worked. Cost me nothing but benefitted me immensely.