Merchant Category Codes and Firearms: Not So Fast Says Visa and Mastercard
In September 2022, the International Organization for Standardization (ISO) approved a new merchant category code (MCC) specifically for firearm and ammunition retailer use when processing a credit-card purchase. MCC codes are a four-digit number that is used to identify the type of business that is making a credit-card purchase. The code is used by banks and credit card companies to track transactions and to assess fees. The code ISO approved for Firearms, designated 5949, was proposed by Amalgamated Bank, a New York-based financial institution that has been critical of the gun industry. This proposed MCC code for firearms sales is a voluntary code that would have been used by credit card companies to track gun sales. The code was approved by the International Organization for Standardization (ISO) in September 2022, but it has not yet been implemented by any credit card companies.
"The code was proposed by gun control advocates who believe
that it could be used to identify potential mass shooters or gun traffickers.
The issue with MCC 5949 is that only the volume and frequency of sales could be tracked,
and the system cannot distinguish whether an individual purchased
$1000 worth of firearms or $1000 worth of hearing protection and hunting clothing"
Proponents believe the new MCC code for firearms sales would allow banks and credit card companies to track gun sales more closely. This code was proposed by gun control advocates who think that it could be used to identify potential mass shooters or gun traffickers. They argue that the code could be used to flag "suspicious" purchases or patterns of spending, though details on how a theoretical flagging system would work remain unclear. The issue with MCC 5949 is that only the volume and frequency of sales could be tracked, and the system cannot distinguish whether an individual purchased $1000 worth of firearms or $1000 worth of hearing protection or hunting gear.
Gun rights supporters argue that the code will be used to chill legal firearms commerce. They say the new MCC could be used to track all lawful gun sales, create a de facto registry, or enable banks to cut off the use of their cards at gun businesses.
In March 2023, Visa, Mastercard, and Discover announced that they would "pause" work related to creating and implementing the code. The companies cited legislation in various states looking to discourage use of the code as the reason for their decision. The future of the MCC code is uncertain. It is possible that the code will never be implemented, or that it will be implemented only in a limited way.
The debate over the implementation of Firearms Sales MCC is likely to continue for some time. Wissota Payments™ provides processing services to all business types engaged in legal activities. We provide payment integrations and solutions for high-risk business types such as CBD or firearms sales. If you are a business owner in a high-risk industry, it is important to do your research and choose a provider that can offer you several options for your high-risk needs.
Prepared by Wissota Payments™ Owner - Michael Lynch
