Merchant category codes are made up of four digits and are used across all sorts of industries as a means to classify retailers, while not revealing individual product purchases. Credit card companies currently lump firearm retailers in with other outlets, classifying them as either “5999: Miscellaneous retail stores” or “5941: Sporting Goods Stores.”
With a new code for firearms merchants, potentially suspicious purchasing patterns could be flagged to law enforcement — much the same way banks and credit unions made more than 1.4 million suspicious activity reports in 2021 for other types of transactions that might suggest anything from identity theft to terrorist financing.
This is part of a plan being pushed by congressional Democrats after Amalgamated Bank of New York, a progressive bank that often involves itself in social issues, made repeated attempts to push for the new code, all of which were denied.
A group of congressional Democrats is urging credit card companies to track suspect firearm and ammunition purchases as a means to identify and stop gun crime, according to a letter obtained by CBS News Thursday.
The letter, drafted by Sen. Elizabeth Warren of Massachusetts and Rep. Madeleine Dean of Pennsylvania and signed by over a dozen of their colleagues, urges the CEOs of Mastercard, American Express and Visa to back the creation of a merchant category code for gun and ammunition retailers — a measure the industry had initially resisted, according to an in June.
“The creation of a new [merchant category code] for gun and ammunition retail stores would be the first step towards facilitating the collection of valuable financial data that could help law enforcement in countering the financing of terrorism efforts,” the letter says.
So it looks like the congressional pressure worked. The new code has been approved but it sounds like Visa is not happy about it even as the CEO of Amalgamated Bank is celebrating.
In a letter obtained by CBS News, sent by Visa on Wednesday in response to congressional Democrats who supported the plan, the company said, “We believe that asking payment networks to serve as a moral authority by deciding which legal goods can or cannot be purchased sets a dangerous precedent.”
Visa wrote, “We understood Amalgamated Bank’s request to be justified, at least in part, by an interest in blocking transactions that would fall under such a new category, and Visa’s rules expressly prohibit blocking of legal transactions under an MCC.”…
“We all have to do our part to stop gun violence,” said Priscilla Sims Brown, President and CEO of Amalgamated Bank. “And it sometimes starts with illegal purchases of guns and ammunition. The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities without blocking or impeding legal gun sales. This action answers the call of millions of Americans who want safety from gun violence and we are proud to have led the broad coalition of advocates, shareholders, and elected officials that achieved this historic outcome.”
Priscilla Sims Brown recently appeared on CNBC where she was asked about her effort to push the new category code for guns. “If we did have a merchant code for gun stores we could detect patterns that would indicate that there had been something unusual going on,” Brown said. She says all the banks will do is file a suspicious activity report at which point it would be up to local or federal law enforcement to act on those reports (she wasn’t very clear about who would be doing the follow up).
If that’s so, why is Visa concerned about attempts to block transactions using these codes? I just checked and so far Elizabeth Warren hasn’t posted any tweets celebrating this outcome. She’ll probably get around to it this weekend.