Should NH ban a credit card category for firearm purchases?

As more of our world moves online, more policy debates center around how businesses collect and use our personal data. The debate over gun laws is no exception; this year the New Hampshire Legislature passed a bill blocking credit card companies from implementing a code for firearm purchases.

How do credit cards categorize purchases?

Credit card companies use a merchant category code (MCC) to classify the goods or services offered by a business. This MCC can be used to calculate rewards or fees on different purchases. For example, if your credit card offers cash back on gas, your credit card company is going to reward you for purchases with MCC 5541, the code for gas stations. Some cards may also restrict your purchases to certain MCCs. For example, a credit card designated for travel expenses might be limited to airlines, taxicabs, and other similar categories.

Payment cards use hundreds of different MCCs, and they can be very specific. For example, there is a code for electric razor stores, a code for detective agencies, and even a code for wig shops.

Until recently, there was no specific code for firearm retailers. They usually fell under MCC 5941, sporting goods stores. However, in 2022 the international group that sets MCC standards created a new code for firearm and ammunition retailers.

Potential impact of a firearms merchant code

Gun control advocates lobbied for a firearm-specific code for several years. They argue this code could help identify suspicious firearm purchases.

For example, in the two weeks before the Pulse nightclub shooting in Orlando, mass murderer Omar Mateen used credit cards to buy almost $20,000 of firearms and ammunition. His average spending before that was only $1,500 per month. Credit card companies may have been able to spot this unusual activity and report it to law enforcement before the attack.

The USA PATRIOT Act already requires financial institutions to report evidence of money laundering or possible funding of terrorist networks, so there’s a precedent for private companies getting involved in law enforcement.

Gun rights advocates counter that the new MCC will infringe on 2nd Amendment rights. They argue that since there are laws against a federal registry of gun owners, private credit card companies should not have access to data that could create a similar registry. The code also would not distinguish between firearm safety purchases (such as a gun safe) and actual firearms, so safety-conscious gun owners might be unfairly flagged for investigation.

Other privacy advocates have cautioned against setting a precedent to surveil credit card purchases. In theory, for example, MCCs could be used in the future to track purchases related to abortion.

Since the announcement of the new firearms code, states including Texas and Florida have passed laws banning banks and businesses from using the code. California, however, recently passed a law requiring payment processors to use the code. While some members of Congress want the federal government to take a stand, for now it’s up to individual states on whether to ban or require the MCC for firearms.

New Hampshire’s response to a firearms merchant code

This year seven Republican representatives introduced a bill to ban the firearm code in New Hampshire, HB 1186.

HB 1186 specifically prohibits payment card networks and retailers from using a merchant code that is specific to firearms. If the Attorney General finds that a person or business is using a specific firearms code, that person or business would have 30 days to stop using the code and change their systems. However, if they keep using the firearms code, the Attorney General could take them to court. 

There are no criminal penalties in HB 1186, but the person or business could end up paying a civil penalty.

Supporters of the bill argue that New Hampshire needs this law, in particular, because our state constitution includes a right to privacy.

Opponents argue New Hampshire should not block private businesses from using a code that could help public safety.

The House and Senate both passed HB 1186, so now it heads to the desk of Gov. Sununu for a signature or veto. If you have an opinion on this bill, reach out to the governor’s office. There is a form to submit your opinion through the governor's website.