LITTLE ROCK, Ark. (Feb. 17, 2025) – A bill introduced in the Arkansas House would prohibit financial institutions operating in the state from using a credit card merchant code to enable the tracking of firearm and ammunition purchases.
Rep. Aaron Pilkington and Sen. Clint Penzo filed House Bill 1443 (HB1443). Under the Second Amendment Financial Privacy Act, financial institutions and payment networks operating in Arkansas would be prohibited from “requiring the usage of a firearms code in a way that distinguishes a firearms retailer from general merchandise retailers or sporting goods retailers located in this state.”
Payment systems would also be barred from “discriminating” against a firearm retailer through any of the following actions.
- Declining a lawful payment card transaction based solely on the assignment or nonassignment of a firearms code to the firearms retailer or transaction;
- Limiting or declining to do business with a customer, potential customer, or merchant based on the assignment or nonassignment of a firearms code to any previous lawful transaction involving the customer or merchant;
- Charging a higher transaction or interchange fee to a merchant or for a lawful transaction based on the assignment or nonassignment of a firearms code;
- Otherwise taking any action against a customer or merchant that is intended to suppress lawful commerce involving firearms, firearm accessories or components, or ammunition, which action is based solely or in part on the customer’s or merchant’s business involving firearms, firearm accessories or components, or ammunition.
Language in the bill expressly prohibits government entities from keeping a list or registry of privately owned firearms except in the course of a criminal investigation.
To date, at least 14 states have banned the use of firearms merchant codes.
IMPACT ON FEDERAL PROGRAMS
In response to legislation such as HB1443 the major credit card payment networks “paused” implementation of the firearms merchant code in March 2023.
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.
In July 2024, Visa and Mastercard told USA Today that they were only using the firearms code in the states that require it by law.
Additionally, data collected from this merchant code would almost certainly end up in federal government databases.
In a nutshell, without the code, the feds can’t gather and compile information on firearms purchases. 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.
BACKGROUND
Merchant Category Codes (MCCs) have their roots in the IRS. They were created to classify different types of businesses and to identify the goods and services they sell. This was sold as an improvement for better tax reporting, and is still touted, as CNBC put it, as a tool to help “prevent things ranging from fraud to human trafficking.” But as is so often the case, “it’s for your safety” morphed into “so we can control you.”
In September 2022, the International Standards Organization, based in Switzerland, approved a new merchant category code for firearm and ammunition merchants. Many of the bills passed specifically reference the code “5723.”
In effect, the firearms code is a de facto gun registry.
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 firearms and ammunition purchases in cooperation with law enforcement.
The more states that ban such codes, the more likely this program gets scrapped permanently.
WHAT’S NEXT
HB1443 was referred to the House Committee on Insurance and Commerce where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
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