In late 2022, credit card payment titans such as Visa, Mastercard, American Express, and Discover announced that they would be implementing a merchant category code specific to gun and ammunition stores. Once this update took effect, it would have made it possible for customers’ firearms transactions to be flagged and disclosed to authorities with the intent of safely quelling suspicious activity. While some applauded the effort, others were concerned that this would have a negative impact on gun store profits while simultaneously impinging on the Second Amendment rights of American citizens. 

The origins of the initiative.

New York-based Amalgamated Bank spearheaded the push for this code, urging the International Organization for Standardization (ISO) to add it into its requirements. The goal was to assist companies in accurately reporting suspicious activity and illegal sales without interfering with adults’ legal rights to purchase firearms and related equipment.

Resistance.

In spite of Amalgamated Bank’s and the ISO’s laudable intentions, the initiative raised concerns among many lawmakers and gun rights activists, leading to the introduction of bills in multiple states aimed at curbing the codes.   

Because of this, the credit card companies became squeamish. According to a Visa spokesperson, for example, lawmakers’ subsequent efforts to restrict or prohibit implementation of the code brought about “significant confusion and legal uncertainty in the payments ecosystem,” adding that “the state actions disrupt the intent of global standards.” Mastercard concurred, predicting that passage of some of the code-halting bills being considered in certain legislatures would lead to inconsistency. Consequently, plans for adoption were suspended indefinitely.

Moving forward.

Now that the prospects for the code are paused, the firearms industry can return to business as usual. With firearms sales numbers remaining brisk, new merchants continue to enter this industry.

However, some aspects of the business still need to be noted. Primarily, due to the nature of the industry, its significant regulatory environment, the greater likelihood of fraud and chargebacks, and the perceived reputational hit that gun products represent, these stores continue to be deemed “high-risk businesses” by payment processing companies. In other words, sellers still need to make it a point to find a firearm friendly merchant account provider with experience in the industry to help them navigate the regulatory and security landscape.

The good news for gun merchants is that it is possible to be very successful even though their business will automatically receive high-risk status. As was the case long before the merchant category code became a possibility, the key priority for any new firearms seller is to find a high-risk account provider with experience in the gun industry, high-quality customer service and fair and transparent pricing. These reputable companies exist and are ready to provide secure, industry-specific payment processing for any company demonstrating the willingness to enter into a partnership with them.