Starting May 1, 2025, California has begun requiring all firearm and ammunition retailers to be assigned a dedicated merchant category code (MCC). This mandate, introduced under Assembly Bill 1587 (AB 1587), is designed to distinguish firearms-related merchants from general retail, adding a new layer of financial oversight to one of the country’s most polarized industries.
While the state argues this MCC will support law enforcement efforts and increase transparency, critics warn that it could lead to privacy violations, merchant discrimination, and inconsistent enforcement across state lines.
What Is the Firearm MCC Code?
A merchant category code is a four-digit number used by card networks to classify businesses. For years, gun retailers were lumped into categories like sporting goods or general merchandise. California’s move requires processors to use a firearm-specific MCC—5723, approved by the International Organization for Standardization (ISO).
More on MCC codes:
This new classification will apply to any business primarily selling firearms or ammunition and must be enforced by all acquirers doing business in California.
Key Compliance Dates and Penalties
- By July 1, 2024: Card networks are required to provide the MCC to all acquiring banks.
- By May 1, 2025: All firearm and ammunition retailers in California must have the correct MCC assigned.
- Non-compliance: Acquirers that fail to assign the code may be fined $10,000 per violation.
Why It Matters to Firearm Retailers
For merchants, the implications are significant. Being labeled with a firearm-specific MCC can:
- Increase your risk profile with banks
- Affect your approval chances for merchant accounts
- Trigger higher reserve requirements
- Invite added scrutiny from regulators
The code itself does not identify what was purchased—only that the transaction occurred at a firearms-related business. Still, many in the industry believe this opens the door to financial profiling or de-banking.
National Reactions and Political Divide
The response to California’s firearm MCC mandate has been deeply divided.
- Supporters point to past cases where large credit card purchases preceded mass shootings. They argue that a dedicated MCC might have allowed banks or authorities to flag suspicious activity earlier.
- Opponents, including lawmakers in Texas, Florida, and Montana, have introduced or passed bills that ban the use of firearm-specific MCCs altogether. They argue it’s a violation of consumer privacy and could lead to a de facto gun registry.
What the Card Networks Are Saying
Visa and Mastercard have expressed concern about the inconsistent policies across states. Visa’s public statement noted that MCCs are designed to classify merchants—not track individual items or purchases.
“We do not believe private companies should serve as moral arbiters… It would be an invasion of privacy for banks and payment networks to know each of our most personal purchasing habits.”
Both networks have paused full-scale implementation until legal clarity is achieved, stating that conflicting state laws make compliance risky and operationally complex.
Pros and Cons of the Firearm MCC Requirement
Potential Benefits
- Easier identification of suspicious patterns by banks
- Support for investigations into trafficking or organized crime
- Compliance with ISO global standards
- Additional transparency in firearm-related commerce
Potential Drawbacks
- Risk of being denied payment processing by mainstream providers
- Merchant account reserves and higher fees
- Legal concerns around tracking constitutionally protected purchases
- Unclear impact on actual crime prevention efforts
Corepay: Your Trusted Firearms Payment Processor
At Corepay, we specialize in supporting firearm and high-risk merchants through every compliance challenge. We understand the complexities of AB 1587 and work directly with firearm retailers to ensure uninterrupted, MCC-compliant processing.
We offer:
- Firearm-friendly acquiring bank relationships
- Chargeback mitigation and compliance monitoring
- Fast, knowledgeable onboarding for FFLs and ammunition retailers
Let us help you stay operational, compliant, and protected—especially as states introduce new MCC rules and regulations.
Read more about our firearms payment processing here.
Read more about our ammunition payment processing here.
Final Thoughts
As California becomes the first state to enforce a firearm-specific MCC, merchants must prepare for increased scrutiny and shifting rules. While some view this as a necessary public safety measure, others see it as an overreach with unintended consequences.
Whether you’re a small FFL, an eCommerce ammo supplier, or a national chain, staying compliant without sacrificing business continuity is now more important than ever.
