Visa, the biggest U.S. card network company, raised concerns Tuesday about a new merchant category code for gun-sellers even as it said it would begin working with bank card issuers to implement the new code.

Before the new code was approved last week by the International Organization for Standardization, some actors in the card and payments industry had reportedly resisted creating the new, unique code for gun-sellers. But a campaign recently by state and local officials, big pensions and gun-control advocates to create the new MCC as a means to reduce active shooter incidents in the U.S. prevailed.

Visa has been largely mum on the issue, as support for a proposal to add the code by Amalgamated Bank gathered support and momentum. While card networks like Visa and Mastercard provide the network over which card transactions flow, it’s the banks that issue the credit cards.

After repeatedly declining to comment, Visa spoke out in a blog post yesterday in the wake of passage of the new ISO standard to share what amount to misgivings about the new code and how it is perceived.

“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,” Visa said in the Sept. 13 blog post on its website. “That’s not what merchant codes are designed for, nor should they be.”

The San Francisco-based card network company gave a full-throated blast to the notion that the new code would in any way be used to impede any lawful transactions. “We do not believe private companies should serve as moral arbiters,” Visa said in the post. “Asking private companies to decide what legal products or services can or cannot be bought and from what store sets a dangerous precedent.”

While Visa is making a blanket statement that applies to all merchants, it’s a sentiment that might console the gun industry. The National Rifle Association of America in a Tuesday post of its own bashed the new code, calling the change an attempt to create a “gun registry.”

“If fully implemented by the various payment processors, the hope of gun control groups for this new MCC is that it would create a registry of gun owners that they have long sought and provide them with another tool to attack lawful industry when firearms are used in crime,” the NRA said in the Sept. 13 post.

In a seeming acknowledgment to such concerns, Visa stressed that the code wouldn’t be used for any kind of surveillance. “When we process a transaction, we have no visibility into what items a consumer is purchasing — this is true irrespective of which MCC applies to a merchant,” Visa said in the statement. “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.”

While Visa said it plans to implement the new code, it didn’t provide a timetable for doing so. The company said it would work “with our financial institution clients to enable them to implement this new MCC when ISO makes it available.” An ISO spokesperson said Wednesday the organization expects the new code to be added by next week.

But it also cautioned its bank card issuers and payment processors about using the code for anything beyond that purpose, specifically interfering with lawful purchases.

“Our network does not allow any financial institution member to deny transactions for the purchase of legal goods or services based on which MCC they fall under,” Visa said.

The NRA didn’t seem convinced. The gun lobbying group suggested its gun-control opponents will use the new code to their advantage. “Anti-gun groups will almost certainly use the new flagging system to create liability for any banks or payment processors who do business with the firearm industry,” the NRA said in its statement.

And the group aims to water down implementation of the code. “Fortunately, the ISO codes are not mandatory for payment processors to adopt,” the NRA statement said, saying certain unidentified lawmakers are asking “major payment processors if and how they intend to implement the new code.” The group also said it is “working on several ways to prevent or reduce implementation of the new MCC.”

By Lynne Marek on Sep 14, 2022
Original link