What will Credit Cards default position be in the Gun Store MCC controversy?
Some states will ban, some will mandate, but what about those states without a policy?
There is an interesting article in American Banker discussing what the impact of California’s law mandating the use of a gun store Merchant Category Codes (MCC) by credit card companies will be nationally. The article discusses whether California’s decision will drive adoption more broadly, though as the article says, seven states have banned the use of the MCC. As such, credit card companies will have different MCCs for the states that mandate and the states that ban. But what about states whose law is silent on the question? What will the card companies do in those states?
It isn’t an idle question. The use of MCCs as a tool of surveillance is controversial to say the least. If card companies only roll out the MCC in mandated states and leave everything else alone they will get attacked by the left at the state and federal level. If their default position is to use the MCC unless prohibited, they will get attacked by the right. Even if the choice is driven by some legitimate business purpose like efficiency it will be hard for card companies to explain that to those who are disappointed.
Further, there may be hidden legal issues in states that are silent on the use of MCCs. For example, if a state preserves a right to privacy greater than the federal constitution there may be legal issues to using the MCC code given its sensitivity. Maybe not, I don’t know, but I doubt the credit card companies know either.
There are pushes at the federal level to either globally mandate or prohibit the use of the gun store MCC. Unsurprisingly, I favor the latter, as I mentioned in a letter I submitted to the House Financial Services Committee in advance of their FinCEN oversight hearing today. However, given the divided nature of government it seems unlikely that any movement on the federal level will occur soon.
In the meantime, credit cards will have to navigate troubled and politically charged waters, waters they chose to swim in to some extent. Nonetheless, they are being sucked away by the current. And it isn’t likely to stop with guns. If this is normalized, I would expect greater efforts to create narrow MCCs for abortion, “extremist groups” as defined by whoever has power at the moment, and whatever else becomes controversial. The further politicization and weaponization of life will continue apace, with likely limited benefits and great costs. That would be unfortunate and should be avoided.