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The ISO global standard requires card networks to implement a merchant category code (MCC) for gun purchases but the largest card companies have decided to put those plans on hold as several US states have moved to ban the gun code.
The largest US card networks, including Visa, Mastercard, American Express (Amex) and Discover, have confirmed that they will halt the implementation of the MCC for gun purchases.
“Today, there are bills advancing in several states related to the use of this new code. If passed, the result will be an inconsistency in how this ISO standard could be applied by merchants, issuers, acquirers and networks,” a Mastercard spokesperson told VIXIO.
“It’s for that reason that we have decided to pause work on the implementation of the firearms-specific MCC,” the company added.
Visa has also cited state legislative actions as a reason for putting the initiative on ice, arguing that there is “significant confusion and legal uncertainty in the payments ecosystem, and the state actions disrupt the intent of global standards”.
The International Organization for Standardization (ISO) adopted in September a global standard to create a specific code for gun stores after years of failed attempts.
Prior to the adoption of the standard, gun merchants fell into the category of “miscellaneous and speciality retail stores”, which includes party supply stores, silk flower shops and ice dealers, as previously reported by VIXIO.
Although ISO standards are not binding on the card network, each of the top four networks announced their intention to follow the standard.
Since then, legislators in at least ten states have introduced 16 bills to prohibit the use of MCC for gun purchases, with Mississippi and West Virginia being on the verge of passing their bills into law.
Other legislative actions attempt to ban discrimination based on the use of the gun-specific MCC.
The Electronic Transactions Association (ETA) said “it favours bills that ban the use of the new MCC as the best option for the politicization of the payments industry, as the ban on MCC codes is less detrimental than making it illegal for financial institutions to discriminate against entities related to firearms”.
The issue of the gun code is nonetheless heavily loaded politically, which is reflected in the fact that 15 of the 16 bills banning the code have only Republican sponsors. The Mississippi bill got the backing of three Democratic lawmakers, in addition to 23 Republican sponsors.
Previously in September, 28 Democratic members of Congress sent a letter to the card networks, pressuring them to adopt the new code. A couple of days later the CEOs of Visa, Mastercard and Amex received another letter from Republican attorneys general in 24 states, urging them not to implement it.
Opponents argued that tracking gun purchase data only matters if that data is later used, which could result in harmful actions such as infringing consumer privacy, selectively restricting the use of card payment systems for certain purchases, or otherwise withholding financial services from targeted “disfavoured” merchants.
The NSSF firearm trade association said the ISO’s u-turn to adopt the code “raises serious questions about the politicisation of ISO standard setting”.
However, as the country is experiencing a growing number of mass shootings, supporters of the gun code claim that it could help financial institutions to detect suspicious activity the same way they do with fraud or money laundering.
Priscilla Sims Brown, CEO of Amalgamated Bank and a fierce supporter of the gun code, pointed out that firearms and ammunition used in many of the mass shootings in recent years were paid for by credit cards.
