In letters to the CEOs of Visa, Mastercard and American Express, congressional Democrats urged the companies to support the creation of a new merchant code for gun sellers and questioned them about not backing that move previously.

Adding to a chorus of calls for card companies to support the change, three U.S. senators, including Sen. Elizabeth Warren (D-MA), and 25 House members, including Rep. Madeleine Dean (D-PA) and Rep. Danny K. Davis (D-IL), pressed Visa CEO Al Kelly, Mastercard, CEO Michael Miebach and Amex CEO Steve Squeri on the issue.

The lawmakers pressed the CEOs for details on the companies’ roles in the prior opposition to a new merchant category code (MCC) for standalone gun sellers and whether they now support the move. The legislators asked for answers by Sept. 15.

“The creation of a new MCC 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,” Congress members wrote. “A new MCC code could make it easier for financial institutions to monitor certain types of suspicious activities including straw purchases and unlawful bulk purchases that could be used in the commission of domestic terrorist acts or gun trafficking schemes.”

The card companies are under increasing pressure to back the creation of such a unique four-digit code for gun and ammunition sellers as a way to track troublesome gun purchases. The calls for that change come as mounting deaths in active shooter incidents focus public attention on how shooters are purchasing firearms and ammunition. 

Last week, public pensions filed shareholder proposals with Mastercard and Amex seeking such changes. Also, elected officials in New York and California called on the companies to support the effort.

On Tuesday, gun violence prevention groups including Guns Down America and New Yorkers Against Gun Violence sent letters to Visa, Mastercard and Amex urging the CEOs to “drop your opposition and actively support” the creation of a new MCC.

“We understand Visa’s responsibility to permit lawful transactions on its network, but we do not believe the creation of a new MCC for gun and ammunition retail outlets would thwart its ability to do so,” lawmakers wrote in the letter to Visa CEO Kelly, reported earlier by CBS News. “Based on our understanding that gun and ammunition retail outlets meet the criteria for a new MCC, as well as the potential uses of the MCC to prevent heinous crimes like domestic terrorism, we are disappointed that Visa is pushing back on the application.”

Currently, thousands of standalone gun and ammunition stores in the U.S. are categorized as “miscellaneous,” code 5999.

A Mastercard spokesperson, Seth Eisen, said last week that Mastercard is reviewing how a proposal “could be implemented and managed by the banks that connect merchants to our network.” 

Visa and American Express have not responded to repeated requests for comment.

Discover Financial Services, the fourth largest card company, has been absent from the conversation. A spokesperson for that company hasn’t responded to requests for comment. 

An application to create a new industry-wide code is under review by a Geneva-based standards organization called the International Organization for Standardization. The application was made by New York-based Amalgamated Bank.

A spokesperson for ISO, which includes representative members from Visa and Mastercard, said a vote on the issue is expected soon, but wouldn’t provide a specific date. A decision on Amalgamated Bank’s application “is expected within the next few weeks, but we don’t have a fixed date yet,” said ISO Spokesperson Maria Lazarte said by email.

Amalgamated Bank first petitioned for the creation of the code in 2021, but an ISO committee rejected the request, said Maura Keaney, a first vice president at the bank. That committee also denied the bank’s appeal to that decision, “citing concerns about implementation,” Keaney said by email. The bank believes those concerns are addressed in the guidance on MCC use, she said.

Visa and Mastercard are among the companies listed by ISO as contributing “experts” to the organization’s review process. Those professionals are “selected for their expertise and not as representatives of their own companies (our code of conduct states that they must act in their personal capacity only),” Lazarte said in an email. 

Typically, Visa, Mastercard and other major players decide how merchants will be categorized and identified with codes, and they work with ISO to update the list, so ISO simply serves as “the record keeper,” said industry consultant Cliff Gray, who leads Gray Consulting.

Using MCCs to identify gun purchases would be “largely ineffective,” Gray contended, because they’re an underwriting and monitoring tool used by those on the acquirer side of payments and weren’t intended to track individual transaction detail.

“The stores can be categorized more accurately, but there always remains some subjective decision,” Gray said in an email. “If gun purchases need to be tracked/monitored/throttled, it should be done on a per/transaction basis, using what the industry calls level 2 and level 3 transaction detail.”

By Caitlin Mullen on Sep 7, 2022
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