Visa, Mastercard Pause Work On New Payments Code For Firearms Sellers

Top payment networks Visa Inc and Mastercard Inc said on Thursday they have paused work on implementing a new sales code for gun merchants, citing Republican pushback in various U.S. states on concerns about improper tracking of consumer behavior.

The Geneva-based International Organization for Standardization (ISO) approved the new merchant category code (MCC) in September to help detect suspicious firearms and ammunition sales to combat gun violence. Bills in several Republican-led states would bar or limit the use of the voluntary code.

A Mastercard representative said on Thursday via email that such bills would cause "inconsistency" in how the code could be applied by merchants, banks and payment networks.

"It's for that reason that we have decided to pause work on the implementation of the firearms-specific MCC," said the Mastercard representative, Seth Eisen.

Visa also cited state bills as driving its decision.

"There is now significant confusion and legal uncertainty in the payments ecosystem, and the state actions disrupt the intent of global standards. Accordingly, Visa is pausing implementation of the MCC," Visa said in a statement sent by a spokesperson.

Discover Financial said in an emailed statement that it was removing the new MCC from its next network update planned for April in order "to continue alignment and interoperability with the industry."

A representative for American Express, the third-largest payment network, did not immediately comment.

The moves mark a setback for gun-control activists, though the payment networks stopped short of saying they would reject the code outright.

All the top payment networks had said they would adopt the new code but only the smallest, Discover, had given a public timetable for doing so, in April, and said it was only following the lead of others.

Bloomberg News earlier reported the implementation pauses by Visa and Mastercard, citing people familiar with the matter. Mastercard's Eisen noted the code would not allow banks to track specific items purchased by consumers.

"We are committed to working with policymakers and elected officials to contribute to constructive solutions that address the gun violence issue, while respecting important constitutional rights and protections for lawful activities," he said.

Montana Attorney General Austin Knudsen, among the Republican critics of the new code, said in a statement on Thursday that "Visa and Mastercard came to the correct conclusion."

"However, they shouldn't just 'pause' their implementation of this plan - they should end it definitively. Discover and American Express should do the same," he added.