Whether you’re getting your car fixed or buying dinner, almost every business that accepts a credit card has a unique merchant code that identifies your purchase, except when you’re buying a gun.
A Merchant Category Code, commonly referred to as an MCC, is a four-digit number used by credit card companies to classify different types of businesses and identify the types of goods or services a company sells. They were first commissioned by the Internal Revenue Service in 2004and currently, MCC guidelines are maintained by the International Organization for Standardization.
If you’ve ever been called by your bank, asking you to confirm past purchases that were detected as potentially fraudulent, it was through an MCC. Credit card companies use MCC information and data to find outliers or patterns in consumer purchases to prevent things ranging from fraud to human trafficking.
Priscilla Sims Brown, president and CEO of Amalgamated Bank, told CNBC’s Andrew Ross Sorkin at the Evolve Global Summit on Wednesday that the banking and financial industry can and should use these codes to track gun purchases. to help prevent acts of armed violence. .
“While there are merchant codes for the barbershop and shoe shiner and all other retailers, there is no merchant code for gun stores,” Brown said. “If we had a merchant code for gun shops, we could detect patterns that would indicate something unusual happened.”
Credit card companies could detect any unusual activity and submit a suspicious activity report to law enforcement, if necessary. This kind of activity monitoring would prove particularly important, Brown said, in detecting when someone is buying large amounts of guns, or when someone is buying guns for someone who is not legally authorized to. do it.
Software would be able to detect, for example, if someone spent $1,000 at a gun store and, on the same day, received a deposit of $1,000 from someone who is not legally authorized to buy firearms herself. Furthermore, the type of mass purchases that MCCs would allow banks to detect has proven to be a pattern in the purchase history of recent mass shooters in the United States.
The shooter who killed 59 people at a Las Vegas music festival in 2017, for example, charged more than $90,000 on credit cards before the shooting. The New York Times reported that the shooter had opened six new credit card accounts in the previous months and twelve days before the shooting began a gun and ammunition buying spree over $26,000. Before that, his average expenses were only $1,500 a month.
If those gun purchases had been tagged with an MCC, Brown said, the credit card companies would have been made aware of the alarming pattern.
To date, Visa and Mastercard are against a gun dealer code. Brown said of the reasons provided by the credit card companies, “We think each of those reasons would be something that could be managed.”
Card companies have raised concerns about the differences between big-box stores that sell many items and more specialized gun retailers.
Visa and Mastercard could not immediately be reached for comment.
Amalgamated Bank submitted an application to establish an MCC for firearms and ammunition dealers in July 2021, but was rejected by the International Organization for Standardization. CBS obtained documents last month, which show that employees of domestic and international credit card companies, including Visa, Mastercard and American Express, were part of the internal committee that recommended the application be denied.
Brown said resistance from Visa and Mastercard is based on issues for small gun shops and large retailers that can be overcome by having more than one MCC. “You can certainly have more than one merchant code, including one for those that are pure gun stores and those that aren’t. So there are a number of ways to deal with that if we wanted.”
In fact, it is already common practice. A supermarket that has both a grocery store and a pharmacy, for example, may have different CCMs for the different products sold within the same company.