California this month became the first state to require credit card companies to create unique four-digit codes for stores that sell firearms, and on July 1, the same day California’s law went into effect, Tennessee, Georgia, Iowa and Wyoming also had laws banning the codes go into effect.
This code, called a Merchant Category Code (MCC), tracks the type of business with which a transaction took place and determines tax reporting, transaction fees, etc. It can also be used to track purchasing behavior, although the MCC doesn’t record the specific item purchased.
An international standards nonprofit group paved the way for credit card companies to create new codes for firearms retailers in 2022, and since then, state legislatures have moved in opposite directions on either encouraging or banning credit card companies’ use of the codes.
Colorado passed a similar law this year, which was welcomed by gun safety advocates, but bills banning MCCs have been introduced in more than 15 Republican-leaning states, with many already enacted.
Here are the different approaches states are taking to requiring MCCs for firearms retailers.
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According to Reuters, the International Organization for Standardization has approved the creation of a code called a “merchant category code,” or MCC, for firearms retailers in 2022. The code would be a way to categorize businesses by the type of goods they sell. Financial institutions could use it to see how a purchase was processed, but would not be able to identify the specific goods that were purchased.
MCC codes exist for many different products and industries – for example, Visa defines MCC codes for veterinary services, airlines, tolls, and gambling.
Gun reform advocates support the new rules, and in a 2023 letter signed by 14 senators, including Sens. Elizabeth Warren (D-Mass.) and Kirsten Gillibrand (D-N.Y.), urged the Treasury and Justice departments to issue guidance to financial institutions to enforce the rules. The lawmakers said the rules could help financial institutions spot and report illegal purchases to law enforcement before they lead to a tragic mass shooting like the one at Robb Elementary School in Uvalde, Texas.
The four major credit card companies initially announced plans to use the code, but faced legislative roadblocks in several states and backed off in March 2023, until it was mandated in California as of July 1. Indeed, the Visa Merchant Data Standards Manual states that MCC 5723 for gun and ammunition stores is effective as of July 1.
The National Rifle Association’s Legislative Action Institute is partially credited with pushing state lawmakers to pass state bans.
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California, Colorado and New York Pass MCC Requirements for Firearms Retailers
According to a press release from the bill’s sponsors, California Governor Gavin Newsom signed AB 1587 in September 2023, which requires banks and credit card companies to implement MCC for firearms dealers in the state.
Payment institutions had until July 1, 2024 to create the codes and May 1, 2025 to assign MCC codes to merchants.
Colorado Governor Jared Polis signed a similar bill in May. The bill requires gun dealers to have MCCs, but only in Colorado. The bill is set to go into effect on August 7, 2024. Supporters of the Colorado bill point to the 2012 mass shooting at an Aurora movie theater that left 12 people dead and 60 injured. The shooter reportedly used his MasterCard to buy $11,000 worth of weapons and equipment in the six weeks leading up to the incident, according to the Fort Collins Coloradoan, a USA Today Network newspaper.
Colorado’s bill was praised by gun violence prevention groups Brady and Guns Down America.
A similar bill passed the New York State Senate at the end of the 2024 legislative session. In an email to USA Today, New York Gov. Kathy Hockle’s office said she would review the bill but did not say whether she planned to sign it.
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The NRA urged lawmakers to address the MCC, and 16 bills were signed.
According to the National Firearms Industry Trade Society (NSSF), 16 states have enacted laws aimed at prohibiting firearm retailers from assigning MCCs, including:
- Florida – Effective July 1, 2023
- Idaho – Effective July 1, 2023
- North Dakota – Signed by the Governor on April 29, 2023
- West Virginia – Effective June 8, 2023
- Texas – Effective September 1, 2023
- Montana – Effective October 1, 2023
- Mississippi – Effective January 1, 2024
- Utah – Effective May 1, 2024
- Iowa – Effective July 1, 2024
- Wyoming – Effective July 1, 2024
- Tennessee – Effective July 1, 2024
- Georgia – effective from 1 July 2024
- Louisiana – Effective August 1, 2024
- Indiana – Effective October 1, 2024
- Alabama – Effective October 1, 2024
- Kentucky – Effective January 1, 2025
Similar bills have also passed at least one legislature in New Hampshire and Ohio.
Some of these state laws are informally known as “Second Amendment privacy laws” or “Second Amendment financial privacy laws,” and the NRA and NSSF have praised many of the new laws.
Following Louisiana Governor Jeff Landry signing SB 301, the latest bill to receive state government approval, NSSF said in a press release:
“This NSSF-supported legislation will protect the privacy and sensitive financial information of people who purchase firearms and ammunition in the Pelican State. … Second Amendment Financial Privacy Act was enacted to prevent the privacy of lawful and private firearms and ammunition purchases from being misused for political purposes.”
Nearly identical statements were made in Iowa, Wyoming and Georgia.
Visa and Mastercard told The Tennessean, a USA TODAY Network subsidiary, that they don’t use the code in the state and only use it when required by law.
Contributors: Nate Trella, Natasha Lovato, Evan Mealins, USA TODAY Network
