AUSTIN, Texas (Sept. 1, 2023) – Today a Texas law goes into effect that prohibits financial institutions operating in the state from requiring a credit card merchant code to track the purchases of firearms and ammunition.

Rep. Matt Schaefer and Rep. Candy Noble introduced House Bill 2837 (HB2837) on Feb. 24. Titled the Second Amendment Financial Privacy Act, the law prohibits a financial institution operating in Texas from requiring or assigning a firearms code, which is defined as “any merchant category code approved by the International Organization for Standardization for a firearms retailer, including Merchant Category Code 5723.”

The law now limits the merchant codes that can be assigned to the sale of firearms, firearm accessories, and ammunition.

“For the purposes of the sale of firearms, ammunition for use in firearms, and firearms accessories, a firearms retailer may provide a firearms code to a payment card issuer or payment card network and may only use or be assigned a merchant category code for general merchandise retailers or sporting goods retailers. Any agreement or contractual provision to the contrary is void.

In response to legislation like HB2837, the major credit card payment networks have “paused” implementation of the firearms merchant code. In an email to Reuters, a Mastercard representative said such bills would cause “inconsistency” in how the code could be applied by merchants, banks and payment networks. The more states that ban such codes, the more likely this program gets scrapped permanently.


HB2837 explains the background for this law in the legislative findings.

In September 2022, the International Organization for Standardization (ISO), based in Switzerland, approved a new merchant category code for firearm and ammunition merchants; In the letter to payment card networks, federal lawmakers stated that the new Merchant Category Code for firearms retailers 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”, expressing a clear government expectation that networks will utilize the new Merchant Category Code to conduct mass surveillance of constitutionally protected firearms and ammunition purchases in cooperation with law enforcement;

The new Merchant Category Code will allow the banks, payment card networks, acquirers, and other entities involved in payment card processing to identify and separately track lawful payment card purchases at firearms retailers in the State of Texas, paving the way for both unprecedented surveillance of Second Amendment activity and unprecedented information sharing between financial institutions and the government; This potential for cooperative surveillance and tracking of lawful firearms and ammunition purchases will have a significant chilling effect on citizens wishing to exercise their federal and state constitutional rights to keep and bear arms in Texas.

The State Attorney General is now authorized to investigate violations of the law and impose civil penalties of up to $10,000 for those found guilty.


Concern about the misuse of firearms databases isn’t just paranoia. The Taliban has reportedly used a firearm ownership database created by the U.S. government to track down gun owners and confiscate firearms in Afghanistan. This goes to show that even if you trust the people creating the database, it can fall into the wrong hands. In other words, the very existence of a database is a danger.

The feds can share and tap into vast amounts of information gathered at the state and local level through fusion centers and a system known as the “information sharing environment” or ISE.

Fusion centers were sold as a tool to combat terrorism, but that is not how they are being used. The ACLU pointed to a bipartisan congressional report to demonstrate the true nature of government fusion centers: “They haven’t contributed anything meaningful to counterterrorism efforts. Instead, they have largely served as police surveillance and information sharing nodes for law enforcement efforts targeting the frequent subjects of police attention: Black and brown people, immigrants, dissidents, and the poor.”

Fusion centers operate within the broader ISE. According to its website, the ISE “provides analysts, operators, and investigators with information needed to enhance national security. These analysts, operators, and investigators…have mission needs to collaborate and share information with each other and with private sector partners and our foreign allies.” In other words, ISE serves as a conduit for the sharing of information gathered without a warrant. Known ISE partners include the Office of Director of National Intelligence which oversees 17 federal agencies and organizations, including the NSA. ISE utilizes these partnerships to collect and share data on the millions of unwitting people they track.

In practice, local data collection using ALPRs, stingrays, drones and other spy technologies creates the potential for the federal government to obtain and store information on millions of Americans including phone calls, emails, web browsing history, location history, and text messages, all with no warrant, no probable cause, and without the people even knowing it.

In a nutshell, without state and local assistance, the feds have a much more difficult time gathering information. When the state limits surveillance and data collection, it means less information the feds can tap into. This represents a major blow to the surveillance state and a win for privacy.

TJ Martinell