House passes bill blocking firearm retailer card codes

The U.S. House passed legislation this week that would prohibit banks and credit card networks from using a merchant category code assigned specifically to firearms retailers, according to Congress.gov and The New York Times. The bill, called the Protecting Privacy in Purchases Act, would require gun dealers to be classified under broader merchant categories such as general merchandise or sporting goods.

The measure targets a payment-system classification tool that can be used to identify the type of business accepting a card payment. A merchant category code, often referred to as an MCC, is attached to a retailer category rather than to an individual product. Under the House bill, financial institutions and card networks could not apply a code that singles out firearms retailers as their own category.

The New York Times reported that the legislation is intended to head off state-level adoption of the firearms retailer code. The House action gives federal lawmakers a role in a dispute that sits at the intersection of payments infrastructure, consumer privacy and gun policy.

How the coding issue works

Card networks and banks use merchant category codes to sort businesses by line of trade. The codes can support routine functions in the payments system, including classification of merchants for processing and compliance purposes. The bill at issue would narrow how that system can be used in one sector by preventing a code that applies only to gun sellers.

If enacted in the form described by Congress.gov, firearms retailers would not be identified through a standalone category in card transactions. They would instead be placed in wider retail classifications, including general merchandise or sporting goods, according to The New York Times.

The distinction is material because a dedicated merchant category can make a class of retailers easier to separate from other businesses in payment data. A broader category makes that separation less direct, since firearms retailers would be grouped with merchants that sell other goods.

Policy background

The New York Times linked the issue to debate that followed the 2018 school shooting in Parkland, Florida, when proposals emerged for the financial industry to help detect suspicious buying patterns before mass shootings. The House bill moves in the opposite direction by restricting use of the payments classification tool for gun sellers.

No vote count, Senate timetable or White House position was included in the materials cited. The bill’s passage in the House marks a legislative step, but further action would be required before any federal change could take effect.

This story draws on original reporting from NYT DealBook.