PYMNTS MonitorEdge May 2024

California Institutes New Credit Card Code for Gun Sellers

California Institutes New Credit Card Code for Gun Sellers

California now requires credit card companies to designate a code for gun sellers.

California became the first state in the country to enforce a four-digit merchant category code (MCC) for stores that sell firearms, USA Today reported Sunday (July 7). The law went into effect July 1, the same day several other states banned MCCs for gun stores.

An MCC tracks the type of business where a transaction happens to determine transaction fees, tax reporting or purchasing behavior, but it does not record specific products purchased.

The International Organization for Standardization approved the creation of an MCC for gun retailers in 2022. The codes are used for a variety of industries, including airlines, gambling and veterinarian services, per the report.

But when it comes to firearms, the codes have become a subject of political debate, with gun reform supporters calling on federal regulators to issue guidance for financial institutions to implement MCCs for gun sales. They argue the codes could help financial institutions identify large purchases and flag them to law enforcement to prevent mass shootings.

Meanwhile, several other states have passed laws with names like the “Second Amendment Privacy Act” or the “Second Amendment Financial Privacy Act,” outlawing the use of MCCs at gun dealers, the report said.

Louisiana, Wyoming, Iowa, Florida and Indiana are among the states imposing these bans, while Colorado and New York have passed measures similar to the one in California.

Credit card companies had initially been on board with the code, but last year paused their plans after several states raised concerns about improper tracking of consumer purchases.

Gun control supporters accused the companies of caving to political pressure, saying the MCCs could help identify people who skirt regulations concerning multiple purchases by buying a single gun at each of several different stores.

“There is now significant confusion and legal uncertainty in the payments ecosystem, and the state actions disrupt the intent of global standards,” a Visa spokesperson told PYMNTS at the time. “Accordingly, Visa is pausing implementation of the MCC.”

Visa and other companies are now complying with the California law, according to the report. The Visa Merchant Data Standards Manual shows that MCC 5723 for guns and ammunition shops went into effect July 1.