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California will mandate that credit card companies assign a specific merchant category code (MCC) to firearm retailers and businesses beginning May 1st, 2025. California will be one of the first states to do so, sparking nationwide controversy surrounding gun politics and privacy law.
Assembly Bill No. 1587 calls for payment card networks to provide the merchant category code for firearms and ammunition businesses to merchant acquirers by July 1, 2024. Beginning May 1, 2025, the bill would also order merchant acquirers to assign this category code to firearms merchants operating in California.
Key Takeaways
- California will require credit card companies to use a special code (MCC) for firearm and ammo retailers starting May 1, 2025.
- Supporters say the code could help spot suspicious activity, while critics worry it invades privacy and targets legal gun owners unfairly.
- Following the new rule may result in extra costs and paperwork for firearm retailers and banks. In California, failing to use the code could lead to large fines.
What is the MCC Code for Firearms, and How Might This Affect My Business?
A Merchant Category Code (MCC) is a four-digit number used to identify and classify the type of business a retailer operates. MCCs may also hold specific details about your financial history, such as when and where purchases were made. These codes are established by the International Organization for Standardization (ISO), a global, nongovernmental organization that sets international standards across various industries, including fair trade, food safety, and payment processing.
The ISO has created a specific high-risk MCC for firearm and ammunition businesses. With California passing AB 1587, the merchant acquirer must assign the MCC to the firearms merchant by May 1st, 2025, or may face a civil penalty of $10,000 for each violation.
Lawmakers Divided on AB 1587
Just as California, Colorado, and New York have taken a solid stance on the new legislation, citing an example where a MasterCard was used to purchase $11,000 of weaponry for a mass shooting, many states have just as firmly opposed it. Texas and Florida, for example, are states that have banned the use of storing data that saves and tracks firearm purchases.
President and CEO of Amalgamated Bank, Priscilla Sims Brown, wrote in an open letter to the House of Representatives,
“Despite these sound economic reasons for denying your request, the ISO eventually caved to immense far-left political pressure and created a firearm-specific MCC. Amalgamated Bank has now stated it plans to use software to flag allegedly suspicious purchases made by Americans exercising their Second Amendment rights and file these red flags for law enforcement. As you know, there is no fair or impartial way to determine from a transaction’s MCC whether a transaction is “suspicious.” The MCC indicates only that a purchase was made at a certain retailer; it does not provide data regarding what was purchased. There is a serious risk that this new MCC will be abused with every transaction flagged as suspicious. At a minimum, monitoring the firearms seller MCC is an overt attempt to chill the exercise of constitutionally protected rights and poses a serious risk of circumventing important existing legal restrictions on the creation of a firearm registry.”
“Despite these sound economic reasons for denying your request, the ISO eventually caved to immense far-left political pressure and created a firearm-specific MCC. Amalgamated Bank has now stated it plans to use software to flag allegedly suspicious purchases made by Americans exercising their Second Amendment rights and file these red flags for law enforcement. As you know, there is no fair or impartial way to determine from a transaction’s MCC whether a transaction is “suspicious.” The MCC indicates only that a purchase was made at a certain retailer; it does not provide data regarding what was purchased. There is a serious risk that this new MCC will be abused with every transaction flagged as suspicious. At a minimum, monitoring the firearms seller MCC is an overt attempt to chill the exercise of constitutionally protected rights and poses a serious risk of circumventing important existing legal restrictions on the creation of a firearm registry.”
Lawmakers Senator Elizabeth Warren and Representative Madeleine Dean sent a rebuttal letter to American Express, Visa, Mastercard, and Discover, explaining,
“It is likely that, if a firearm and ammunition retailer MCC had been operational at the time of those mass shootings, the uncharacteristically large sums spent on credit cards at firearm retailers within a short time span would have been recognized as suspicious and could have been flagged for law enforcement,……“(These companies) already (have) the processes in place to detect crimes such as money laundering and financial support for terrorist organizations…Given that (they have) the capacity to implement the firearm and ammunition retailer MCC and flag suspicious patterns of purchases, (their) pause in adoption of this MCC signals an unwillingness to address (their) role in financing gun trafficking, gun violence, and acts of domestic terrorism.”
Potential Positives of AB 1587
Enhanced Transaction Transparency
Assigning a specific MCC to firearms merchants enables financial institutions to track and report firearm-related transactions more accurately.
Support for Law Enforcement and Public Safety
By making it easier to identify unusual purchasing patterns, such as large or bulk transactions, the bill could assist authorities in preventing illegal gun trafficking and addressing potential threats related to mass shootings.
Industry Standardization
The bill aligns with international standards ISO sets, promoting consistency across financial systems and jurisdictions.
Consumer Awareness
The bill may encourage responsible commerce by providing greater transparency around firearm purchases, similar to the regulations governing other controlled products like tobacco and alcohol.
Nonrestrictive Regulation
The bill does not restrict the purchase or sale of firearms; it simply categorizes transactions. This approach is a balanced means of oversight that respects Second Amendment rights.
Potential Negatives
Risk of Financial Discrimination
Some fear the policy may result in de-banking or discrimination against firearms merchants by financial institutions or payment processors concerned about reputational risks.
Privacy Concerns
Critics argue that categorizing firearms purchases could lead to privacy violations, with the potential for consumer data to be misused or monitored without justification.
Slippery Slope Argument
Opponents worry that this measure could lead to further financial tracking or restrictions on lawful purchases in other politically sensitive areas.
Questionable Effectiveness
There is debate over the effectiveness of the MCC in preventing crime, as the code only categorizes the type of business rather than providing detailed information about specific items purchased.
Operational Burden
Financial institutions and merchant acquirers may face operational challenges in implementing and managing the new code requirements, which could involve administrative or technical hurdles.
What Payment Card Networks Are Saying About the New Gun Bill
Several payment processors are postponing the implementation of merchant category codes (MCCs) for firearms retailers in response to newly enacted state laws that impose differing—and at times contradictory—requirements.
Mastercard and Visa have publicly stated that some lawmakers appear to misunderstand the purpose of MCCs. These codes are designed solely to classify the merchant’s business type and do not reveal any information about individual transactions. The companies also note that inconsistent state regulations hinder the uniform application of MCCs, ultimately compromising the effectiveness of global standards.
On September 13th, 2022, Visa released a statement on their corporate website that quotes the following,
“As background, last week the International Organization for Standardization (ISO), a global standards-setting organization, decided to establish a new merchant category code (MCC) for “gun and ammunition stores.” Many misunderstand what that means and are, in turn, advocating the use of MCCs to “track” gun sales as a potential tool in combatting gun violence. That’s not what merchant codes are designed for, nor should they be… We do not believe private companies should serve as moral arbiters. Asking private companies to decide what legal products or services can or cannot be bought and from what store sets a dangerous precedent. Further, it would be an invasion of consumers’ privacy for banks and payment networks to know each of our most personal purchasing habits. Visa is firmly against this.”
Final Words
As firearm-specific merchant category codes (MCCs) are implemented in states like California, firearm merchants face a shifting regulatory landscape marked by sharp political divisions. While proponents argue the new MCC could aid law enforcement and promote public safety by highlighting unusual purchasing patterns, critics warn of potential privacy violations, financial discrimination, and operational burdens. Payment networks such as Mastercard and Visa maintain that MCCs are intended only to classify business types—not to track individual purchases—and have voiced concerns over inconsistent state laws undermining global standards. As May 1, 2025 approaches, merchants should stay informed, assess their compliance obligations, and prepare for the broader implications of this policy on operations, customer privacy, and industry relationships.
Align yourself with a merchant service provider that specializes in firearm businesses to help you navigate high-risk business challenges.
