Dive Brief:

• Card networks Visa, Mastercard and American Express are taking steps to comply with California’s law requiring banks and credit card companies to implement a new merchant category code for credit card transactions by gun and ammunition retailers, CBS News reported Monday.
• Executives from those companies last month responded to December letters from congressional Democrats, assuring lawmakers the gun code would be available to merchants in California by the law’s May 2025 deadline, according to CBS News.
• “The applicable standalone merchants in California primarily engaged in the sale of firearms will be required to utilize the code,” Mastercard executive Tucker Foote wrote in a letter to Congress members last month, CBS News reported.

Dive Insight:

The card networks were responding to Sen. Elizabeth Warren, D-Ma., and 48 other congressional Democrats, who last year called on those three companies and network Discover Financial Services to resume work to implement the gun merchant category code.

Lawmakers also demanded to know why the companies’ work to do so last year was paused, and whether they planned to comply with California’s law. The code was approved by the International Organization for Standardization in September 2022 and published in February 2023.

Visa’s response addressed how politically fraught the issue has become for the card networks. “With respect to the [firearm merchant code], there continues to be a tremendous amount of regulatory and legislative uncertainty,” Visa Senior Vice President Robert B. Thomson III wrote in the company’s response to lawmakers, according to CBS News.

Colorado is now considering legislation similar to that passed in California. Meanwhile, Texas, Florida, Mississippi and a handful of other states last year all passed legislation related to blocking use of the code, and similar legislation is now being considered in New Jersey, Utah and Georgia.

“Given the conflicting state laws on this topic and the likelihood that other states will enact legislation to either restrict or mandate the code, our implementation pause remains in effect,” Thomson wrote about legislation in various states, according to the CBS News report.

Visa will seek to comply with California’s requirements, he added. California Gov. Gavin Newsom signed the bill into law last September; it took effect Jan. 1, although card networks and merchant acquirers were given more time to comply with the law. 

Anti-gun violence organization Brady, which has worked with California and Colorado lawmakers on the respective bills, has also been in contact with the card networks and banks “to get them to a neutral position,” Brady Senior Counsel Tanya Schardt said in an interview this month.

Card networks and banks “can segregate this by state, and we've worked with them on the bill language to make sure that we can make it work for them,” including the bill’s definitions and timing, Schardt said.

Visa, Mastercard, American Express and Discover didn’t respond to requests for comment. Spokespeople for Warren also didn’t respond to requests for comment.