A customer uses a credit card during checkout
A customer uses a credit card during checkout | Photo by Nathana Rebouças on Unsplash

Analysis: Nixing Credit Card Codes is the Latest Gun-Rights Policy Trend [Member Exclusive]

Financial privacy measures have quickly become one of the fastest-spreading policy successes of the gun-rights movement.

Just this past week alone, three more Republican-led states enacted laws restricting the use of specialty merchant category codes (MCCs) for gun and ammunition stores. The Governors of IowaTennessee, and Georgia signed bills with nearly identical language prohibiting credit and debit card companies from using any MCC that “distinguishes a firearms retailer from a general merchandise retailer or a sporting goods retailer.” The laws also contain provisions prohibiting financial institutions from discriminating against lawful gun businesses and from disclosing transaction data in most instances.

The total number of states with similar laws on the books now stands at 14 (Kentucky, Wyoming, Indiana, Utah, Florida, Idaho, Mississippi, Montana, North Dakota, Texas, and West Virginia have all adopted similar laws). Just two years ago, that number was zero.

That’s a remarkable amount of policy success in such a short period. The progress is akin to other widespread gun rights policy pushes, like permitless carry and Second Amendment sanctuary resolutions.

But while it took those movements decades to become popular across red states, MCC bans have been more of an overnight sensation. That’s largely in reaction to the swift increase in gun-control activism on the same topic.

Until recently, the intersection of merchant category codes and firearms policy was a foreign concept to most political observers. MCCs, which payment processing companies have used for many years, were relatively uncontroversial. They are often used to track general spending categories for things like rewards programs.

However, the seed for political discord over the codes was first planted in 2018 by financial writer Andrew Ross Sorkin. Writing in the New York Times, Sorkin documented numerous instances of high-profile mass shooters using credit or debit cards to purchase the guns and ammunition used in their attacks, often spending thousands of dollars in the process. He pitched the idea of banks and credit card companies attaching specific MCCs to gun stores the companies could use to “track” gun sales and help them report “suspicious” purchasing patterns to law enforcement.

While it did not initially receive much mainstream attention, the piece did inspire activist financial institutions like Amalgamated Bank to begin lobbying the International Organization for Standardization (ISO) to create a firearm MCC. The ISO eventually agreed to do so in 2022. Shortly after, major credit card companies like Visa, MasterCard, and American Express announced they would start using the new code, sparking backlash from gun-rights supporters.

Over 100 Republican congressmen, at least a dozen Senators, and two dozen attorneys general sent the companies separate letters excoriating their decision to adopt the codes. However, it was not until states began passing laws banning the use of the new MCC the pushback started seeing some success. The prospect of facing inconsistent legal regimes led the major companies to “pause” their implementation of the gun MCC last March.

“Multiple U.S. states are considering legislation to prohibit or restrict the use of the new merchant category code (MCC) for gun and ammunition stores,” Julia Thompson, a Visa spokesperson, told The Reload at the time. “There is now significant confusion and legal uncertainty in the payments ecosystem, and the state actions disrupt the intent of global standards. Accordingly, Visa is pausing implementation of the MCC.”

Officially, that is where things stand today, in a “paused” state without a final determination as to whether implementation of the MCC will move forward.

Democrats, spearheaded by figures like Senator Elizabeth Warren (D., Mass.), have continued to pressure the companies and are pushing legislation for nationwide implementation of a gun MCC. Republicans, in turn, have introduced legislation of their own banning the use of a gun MCC under federal law. Neither effort stands much chance of going anywhere in the current Congress.

But there are plenty of signs that the state trend against a gun store MCC will continue. States like New Hampshire, Ohio, Oklahoma, and Alabama are considering similar bills this year and likely won’t be the last. At the same time, as with so many other realms of gun policy in today’s polarized era, blue states are pursuing the exact opposite policy.

California lawmakers mandated the use of firearm MCCs last September with a bill signed into law by Governor Gavin Newsom (D.). Colorado lawmakers recently passed a bill to do the same, though Governor Jared Polis (D.) has not yet signed it into law.

The net result is shaping up to be a national patchwork approach to MCCs with uncertain commitments from the major credit card companies. There are some indications that the companies are taking steps to comply with California’s mandate despite their announced pause. However, they have refused to comment publicly on the matter. Currently, far more states are banning the code than states that have mandated it. That may hinder the viability of global payment companies implementing a code that only applies to one or two states.

The true test of success for the policy movement against gun store MCCs will be whether or not the major companies are forced to abandon the codes once and for all—either by an eventual act of Congress or through sheer unworkability.

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Created by potrace 1.16, written by Peter Selinger 2001-2019

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Created by potrace 1.16, written by Peter Selinger 2001-2019

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