Visa, Mastercard pause work on code aimed at tracking gun purchases

Visa and Mastercard have decided to pause implementing a plan that activists had hoped would track firearm sales and help curb gun violence.

The payment giants said they would suspend their work on the International Organization for Standardization’s new merchant category code – which banks could use when processing transactions for gun and ammunition stores – in a series of client communications this week, according to people familiar with the matter, who asked not to be named discussing internal deliberations.

Visa and Mastercard have previously said the new system might not have had the impact that gun-control advocates had hoped. That’s because the proposed code 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.

A representative for Visa didn’t immediately respond to a request for comment.

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.

“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,” a spokesman for the company said Thursday. “It’s for that reason that we have decided to pause work on the implementation of the firearms-specific MCC.”

The decision to implement the new 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.

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.”