Pensions call on Amex and Mastercard to take steps against gun violence

The news: The New York City Employees’ Retirement System, Teachers’ Retirement System, and Board of Education Retirement System filed shareholder proposals with American Express and Mastercard asking both firms to establish clearer standards for tracking gun sales, per a press release.

What they’re asking: The three pensions want a merchant category code (MCC) created for gun and ammunition stores.

• MCCs classify businesses by the types of goods and services they sell. While most stores have specific MCCs, gun and ammunition stores don’t. MCCs are set by the International Organization for Standardization (ISO) and are assigned to merchants by card networks.
• The pensions filed the proposals ahead of an ISO meeting this fall. The ISO is already considering an MCC code for gun and ammunition stores, a Mastercard spokesperson told Bloomberg.

The three pensions also asked Amex and Mastercard to report their governance of MCC standards and disclose information related to establishing an MCC for gun and ammunition stores. The pensions own a combined $241 million worth of shares in Amex and $834 million worth of shares in Mastercard. While they also own a stake in Visa, they didn’t file a shareholder proposal with the company because they missed the deadline for resolutions.

Why it matters: In the wake of mass shootings in New York and across the country, some lawmakers and government agencies think major payment companies could play a role in helping prevent such fatalities because of their scale and consumer purchase data. Mastercard and Visa held a combined 63% share of global network volume last year, according to the Nilson Report.

• A dedicated MCC code for gun and ammunition stores might make it easier for financial institutions (FIs) to detect unusual purchase activity related to firearms, and potentially alert authorities if needed.
• A gunman put more than $95,000 on credit cards a year before opening fire at a Las Vegas festival in 2017, leaving 60 people dead. An MCC for firearm and ammunition stores could be a step in the right direction in helping prevent such fatalities.

The bigger picture: FIs and fintechs may have to accommodate stronger safeguards around gun sales in the future.

Eighteen Democratic lawmakers sent a letter to Credova—a Montana-based fintech that helps customers finance firearms—this week to understand its marketing and customer acceptance process.

• The lawmakers want to know how Credova prevents people who are barred from obtaining firearms or have past criminal records from making purchases through its platform.
• They also want to know whether past customers have participated in acts of gun violence.

Credova has until September 26 to respond to lawmakers’ queries. The information may inform future regulation related to gun purchasing.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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