California this month became the first state to require credit card companies to create a unique four-digit code for stores selling firearms. And on the same day the law took effect in California, July 1, laws banning that code also went into effect in Tennessee, Georgia, Iowa and Wyoming.
The code, known as the merchant category code (MCC), tracks the type of business where a transaction was made to determine things like tax reporting or transaction fees. It can also be used to track purchasing behavior, but MCCs do not note the specific items purchased.
An international standards non-profit paved the way for credit cards to make a new code for gun retailers in 2022, and since then, state legislatures have moved in opposite directions to either encourage or prohibit credit card companies from using the codes.
Colorado passed a law similar to California's this year, a move cheered by gun safety advocates. But meanwhile, a slew of bills banning MCCs have popped up in more than 15 red states, and many have been signed into law already.
Here is a look at the diverging approaches states are taking to requiring MCCs for gun retailers:
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In 2022, the International Organization for Standardization approved the creation of a code for gun retailers known as a "merchant category code" or MCC, Reuters reported. The codes are a way to classify businesses by the kinds of things they sel. It can be used by financial institutions to see how a purchase should be processed, but does not identify specific items purchased.
MCC codes exist for several items and industries. For example, Visa outlines MCC codes for veterinary services, airlines, tolls and gambling.
Lawmakers backing gun reform supported the new code and called on the Department of the Treasury and the Department of Justice to issued guidance for financial institutions to implement the code in a 2023 letter signed by 14 U.S. Senators including Sen. Elizabeth Warren, D-Mass. and Sen. Kirsten Gillibrand, D-N.Y. They said the codes could help financial institutions spot illegal purchases and flag them to law enforcement before tragic mass shootings occur, like that at Robb Elementary School in Uvalde, Texas.
Four major credit card companies initially announced plans to use the code, but backed away in March 2023, facing legislative blocks in several states until being required to do so by California as of July 1. Indeed, the Visa Merchant Data Standards Manual shows that MCC 5723 for guns and ammunition Shops is effective as of July 1.
The National Rifle Association Institute for Legislative Action has taken partial credit for urging lawmakers to pass state prohibitions.
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California, Colorado, New York pass gun retailer MCC requirements
In September 2023, California Gov. Gavin Newsom signed AB 1587, which requires banks and credit card companies to implement the MCC for gun dealers in the state, according to a press release from the bill's sponsor.
Payment institutions were required to create the code by July 1, 2024 and assign the MCC code to merchants by May 1, 2025.
Colorado Gov. Jared Polissigned a similar bill in May, which requires MCCs for gun sellers but limited the applicable businesses to Colorado's footprint. It is set to go into effect August 7, 2024. Proponents of the Colorado bill cited the 2012 shooting at a movie theater in Aurora that killed 12 people and wounded 60. The shooter reportedly used a MasterCard to purchase $11,000 worth of weapons and gear in a six-week period leading up to the shooting, the Fort Collins Coloradoan, part of the USA TODAY Network, reported.
Colorado's bill was applauded by gun violence prevention groups Brady and Guns Down America.
A similar bill has passed the New York State Senate at the tail end of the 2024 legislative session. New York Gov. Kathy Hochul's office said in an email to USA TODAY she would review the legislation, but did not indicate if she plans to sign it.
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NRA urged lawmakers to address MCC, 16 bills signed
According to the Firearm Industry Trade Association (NSSF), 16 states have enacted laws aimed at prohibiting assigning MCCs specifically to gun retailers. Those include:
- Florida - Effective July 1, 2023
- Idaho - Effective July 1, 2023
- North Dakota - Signed by Governor 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 July 1, 2024
- Louisiana - Effective, Aug. 1 2024
- Indiana - Effective Oct, 1, 2024
- Alabama - Effective October 1, 2024
- Kentucky - Effective Jan. 1, 2025
Similar bills have also passed at least one chamber in New Hampshire and Ohio.
Several laws in these states are known informally as the "Second Amendment Privacy Act" or the "Second Amendment Financial Privacy Act" and the NRA and the NSSF have praised many of the new laws.
In response to Louisiana Gov. Jeff Landry signing SB 301, the most recent of these bills to receive the state executive stamp of approval, the NSSF said in a press release:
"This NSSF-supported law protects the privacy and sensitive financial information of people purchasing firearms and ammunition in The Pelican State....The Second Amendment Financial Privacy Act is designed to protect the privacy of lawful and private firearm and ammunition purchases from being abused for political purposes."
Near identical statements were issued for Iowa, Wyoming and Georgia.
Visa and Mastercard told The Tennessean, part of the USA TODAY Network, that they are not using the code in the state, rather, only where it is required to do so by law.
Contributing: Nate Trela, Natasha Lovato, and Evan Mealins, USA TODAY Network
