Visa Inc. and Mastercard Inc. have decided to pause implementing a plan that activists had hoped would track firearm sales and help curb gun violence.
The payments giants — along with Discover Financial Services and American Express Co. — are delaying the work after a series of bills in state legislatures targeted the International Organization for Standardization’s new merchant category code. The MCC was created to be used when processing transactions for gun and ammunition stores.
“There are bills advancing in several states related to the use of this new code,” a spokesman for Mastercard said in a statement Thursday. If passed, the proposals would create an “inconsistency” in how the code is applied by merchants and others, he said. “It’s for that reason that we have decided to pause work on the implementation of the firearms-specific MCC.”
Visa also took a pause because of the “significant confusion and legal uncertainty” the legislative proposals have created, according to a spokesperson.
Visa and Mastercard have previously said the new system might not have had the impact that gun-control advocates had hoped. That’s because it wouldn’t offer the level of detail needed to show what customers were actually buying — making no distinction between, say, automatic rifles and safety equipment. And many politicians and Second Amendment advocates decried the proposed code as an intrusion on constitutional rights and privacy.
The major payment networks had previously all agreed they would implement the new code, which would apply to all purchases at gun and ammunition stores. Firearm purchases at other types of retailers wouldn’t be captured.
“MCCs are one data point that would not provide any insight on specific purchases or resolve larger issues,” the Mastercard spokesman said. “We are committed to working with policymakers and elected officials to contribute to constructive solutions that address the gun violence issue, while respecting important constitutional rights and protections for lawful activities.”
In a statement, Discover said it’s removing the MCC as well, “to continue alignment and interoperability with the industry.”
The companies’ previous decision to implement the code drew almost immediate criticism from politicians. In September, two dozen state attorneys general sent a letter to Visa’s then-chief executive officer, Al Kelly, and Mastercard CEO Michael Miebach calling on them to “take immediate action to comport with our consumer protection laws and respect the constitutional rights of all Americans.”
Since then, several Republican politicians have filed bills in states including Mississippi and Florida seeking to restrict the code by banning banks and payment processors from using it. Earlier this year, a bill that would “prevent the use of payment card processing systems for surveillance of Second Amendment activity and discriminatory conduct” passed West Virginia’s House and was sent to the state’s Senate.
“Due to proposed legislation in several U.S. states related to ISO’s newly issued merchant category code for gun and ammunition shops, we are pausing the process of working with third-party partners to implement this code, consistent with the industry,” a spokeswoman for AmEx said in a statement.
‘Detection scenarios’
The push to adopt the new code was led by Amalgamated Bank CEO Priscilla Sims Brown. In November, Brown said banks were developing technology to identify potential mass shooters by creating “detection scenarios” that, if triggered, would prompt banks to file a Suspicious Activity Report to the Treasury Department’s Financial Crimes Enforcement Network.
Banks already file thousands of suspicious activity reports every year as they detect a litany of potential misdeeds by customers. The new code would mean they treat the issue of tracking gun purchases no differently, Brown said last year.
But gun-rights activists blasted the comparison.
“SARs are specifically required by law and came about through a considered balancing of public safety and personal privacy,” the attorneys general said in their September letter. “Activists pressured the ISO to adopt this policy as a means of circumventing and undermining the American legislative process. The new merchant category code will chill the exercise of a constitutional right without any concomitant benefit.”
Michael R. Bloomberg, founder of Bloomberg News parent Bloomberg LP, helped launch Everytown for Gun Safety, which advocates for universal background checks and other gun-control measures.
