LITTLE ROCK, Ark. (March 19, 2025) – Yesterday, the Arkansas House passed a bill that would prohibit financial institutions operating in the state from using a credit card merchant code to enable the tracking of firearm and ammunition purchases.
Under House Bill 1509 (HB1509), the Second Amendment Financial Privacy Act, a payment card network operating in Arkansas would be prohibited from requiring the use of or assigning a merchant category code “that distinguishes a firearms retailer from other retailers” on transactions within the state. It would also prohibit any entity that establishes a relationship with a retailer for the purposes of processing credit, debit, or prepaid transactions from assigning a “merchant category code that distinguishes the firearms retailer from other retailers, including without limitation merchant category code 5723.”
Arkansas merchants would be barred from assigning category code 5723 as well.
Additionally, the proposed law would prohibit any person, unit of government, or governmental organization from “knowingly keeping or causing to be kept a list, record, or registry of a privately owned firearm or an owner of a privately owned firearm.”
On March 18, the House passed HB1509 by an 80-14 vote.
Rep. Howard Beaty and Sen. Ricky Hill are the sponsors of HB1509.
To date, at least 14 states have banned the use of firearms merchant codes
IMPACT ON FEDERAL PROGRAMS
In response to legislation such as HB1509, 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
HB1509 will move to the Senate. It was referred to the Senate Insurance and Commerce Committee where it must get a hearing and pass by a majority vore before moving forward in the legislative process.
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