Credit Cards 'Pause' Efforts To Track Gun Purchases After Pushback

It’s a win for self-defense rights in ongoing campaigns to conscript businesses for political causes.


Just weeks ago, gun control advocates were doing happy dances as credit card companies prepared to implement a new merchant category code (MCC) that would ease the way, sort of, for tracking gun purchases. Now, under public pressure, financial institutions are backing away from those codes and supporters of self-defense rights are celebrating. It's an illustration of how quickly the high ground can change hands on America's political battlefields. But it also shows how politicized business has become, and how difficult it is for private companies to navigate between the country's political tribes.

In February, Discover announced it would implement a new merchant category code to be used to identify transactions with firearms dealers, and implied that its competitors in the credit card business were doing the same. The code was rolled out last year by the International Standards Organization after intense lobbying by anti-gun American politicians and Amalgamated Bank, an institution that uses financial leverage to promote "sustainable organizations, progressive causes, and social justice."

Premature Victory Lap

Gun-control advocates celebrated a win for efforts to monitor and, potentially, judge purchases.

"Banks are developing technology to identify potential mass shooters, according to a CEO backing the push to get credit-card companies to more closely track gun purchases," Bloomberg reported in November. "'Detection scenarios' are in the works that, if triggered, would prompt banks to file a Suspicious Activity Report to the Treasury Department's Financial Crimes Enforcement Network, Amalgamated Bank Chief Executive Officer Priscilla Sims Brown said at the New York Times DealBook conference Wednesday."

Self-defense advocates understandably took that to mean the new merchant codes would be used to harass gun owners, stigmatize dealers, and maybe isolate both from financial services. They started pushing back—effectively, it seems.

"To continue alignment and interoperability with the industry, Discover is removing the new merchant category code identified as MCC 5723 from our April 23.1 Network Release," a Discover representative told me by email (MCC 5723 is the gun-specific merchant category code).

"Our rules require our customers to conduct lawful activity where they are licensed to use our brands. ISO's decision to create a firearms-related merchant category code (MCC) does not change that," added a MasterCard representative. "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. It's for that reason that we have decided to pause work on the implementation of the firearms-specific MCC."

Visa is taking similar action. American Express didn't reply to requests for comment.

Politicization Gets Political Pushback

MasterCard's reference to "lawful activity" is boilerplate. Merchant codes identify businesses, not transactions. If you purchase a pack of chewing gum at a gun shop it comes up under the same MCC as an AR-15—and both purchases are lawful activity. But the mention of "bills advancing in several states" clearly means legislation such as Florida's SB 214, which would criminalize the use of firearms-specific merchant category codes by financial institutions, and West Virginia's HB 2004, which prohibits discrimination against businesses assigned the firearms MCC and protects information related to such transactions.

Basically, the firearms-specific merchant code has become a political hot potato, with anti-gun politicians demanding its use, and pro-gun politicians threatening consequences if they do. Of course, the code was always intended to be a political instrument, so this outcome was almost guaranteed.

"Banks should report dangerous warning signs to law enforcement when extremists are quickly building up massive stockpiles of guns, but that first requires ensuring gun store transactions have a unique identifier," John Feinblatt, president of Everytown for Gun Safety, urged last year in an open call for the authorities to track purchases by people whose politics he doesn't like. That's exactly what a lot of people don't want, and they've made their objections crystal clear.

"Visa, Mastercard, and Discover came to the correct conclusion," according to Attorney General Austin Knudsen of Montana, one of 24 states that joined together to oppose the firearms-specific merchant code. "However, they shouldn't just 'pause' their implementation of this plan—they should end it definitively. American Express should do the same. This measure will do nothing to improve public safety while invading consumer privacy and inviting coordination between corporations and government agencies to erode Americans' fundamental right to keep and bear arms."

Initially, adopting the firearms-specific MCC seemed like the path of least resistance to financial institutions under pressure from politicians, activist groups, and an ideologically motivated bank. Self-defense advocates changed that dynamic by pushing back through both pressure and legislation.

The next step might be for anti-gun lawmakers to legally compel the use of the code, creating incompatibly legal regimes around the country and a potentially impossible situation for payment processors. Won't that be fun?

Everything Will Be a Political Battlefield

While this particular battle is far from concluded, it's a clear demonstration that everybody can participate in the modern sport of leaning on private enterprise to implement—or resist—policy agendas that politicians find too much of a slog to achieve through the legislative process (or which are prohibited by constitutional protections). In truth, once one side started deputizing businesses to do their bidding, it would have been suicidal for their opponents to refrain from doing the same. An overtly politicized merchant code intended to harass gun dealers and buyers, to track transactions, and to potentially isolate a whole sector of the economy from financial services demanded a response, and that's what it got.

We're certainly in for more of this. The Twitter files revealed government officials leaning on social media to censor speech; Republicans in the House push back with hearings on "the weaponization of the federal government" (testimony by journalists Matt Taibbi and Michael Shellenberger is worth reading). California is pressuring Walgreens for dropping distribution of mifepristone in 20 states—a decision made because those states may penalize the company if it does distribute the drug, which can be used to induce abortions. The pharmacy chain is stuck in the middle of two punitive factions.

Frustrated by political dynamics that (by design) don't deliver easy wins and constrained by constitutional protections, activists are conscripting private enterprise to their causes. If they get their way, everything will become a battlefield.