Protecting legal commerce
On March 9, 2023, Visa shared the following update on new merchant category code for gun and ammunition shops:
During the past several months, multiple states in the U.S. have been considering legislation to prohibit or restrict the adoption of the merchant category code (MCC) for gun and ammunition stores. These legislative actions disrupt the intent of global standards and create significant confusion and legal uncertainty in the payments ecosystem regarding this code and its use, including with acquirers, issuers, merchants and payment networks. We have therefore decided to pause implementation of the MCC at this time.
September 13, 2022 — Over the past week, much has been said about the role of payments companies in facilitating transactions — and what role we should play, if any, in tracking cardholder purchases. We wanted to share Visa’s perspective on this important topic.
As background, last week the International Organization for Standardization (ISO), a global standards-setting organization, decided to establish a new merchant category code (MCC) for “gun and ammunition stores.” Many misunderstand what that means and are, in turn, advocating the use of MCCs to “track” gun sales as a potential tool in combatting gun violence. That’s not what merchant codes are designed for, nor should they be.
MCCs already exist for hundreds of different businesses, including beauty salons, bookstores, newsstands, bowling alleys and bakeries, among many others. They are four-digit category codes used only to classify the type of business a retailer operates. However, MCCs do not give Visa or any other payment network visibility into product-level data, also known as “SKU-level” data. When we process a transaction, we have no visibility into what items a consumer is purchasing — this is true irrespective of which MCC applies to a merchant.
We do not believe private companies should serve as moral arbiters. Asking private companies to decide what legal products or services can or cannot be bought and from what store sets a dangerous precedent. Further, it would be an invasion of consumers’ privacy for banks and payment networks to know each of our most personal purchasing habits. Visa is firmly against this.
As we do when ISO creates a new merchant code, Visa adopts the standards that apply to our industry. For us, that means working with our financial institution clients to enable them to implement this new MCC when ISO makes it available.
A fundamental principle for Visa is protecting all legal commerce throughout our network and around the world and upholding the privacy of cardholders who choose to use Visa. That has always been our commitment, and it will not change with ISO’s decision. Our rules require financial institutions involved in transactions to evaluate and process all legal transactions. Our network does not allow any financial institution member to deny transactions for the purchase of legal goods or services based on which MCC they fall under.
Visa provides our services to everyone, everywhere, so long as they are used for legal purchases. We believe that is the appropriate standard.