You hold a federal firearms license, you follow every transfer rule, and your processor still treats you like a problem it hasn't solved yet. Part of that is the business itself. Part of it is a four-digit number that has been fought over in statehouses for three years.
This guide covers where the firearms merchant category code stands in 2026, the federal and state rules processors expect you to follow, and what an underwriter actually checks when you apply. It is general information, not legal advice.
What a merchant category code is, and why this one became political
A merchant category code, or MCC, is a four-digit number your acquirer assigns to describe what kind of business you are. It drives interchange pricing, rewards categories, corporate card restrictions, and risk models. It describes the merchant, not the individual items in a cart.
Before 2022, gun retailers were typically coded as sporting goods stores or general retailers. In September 2022, the International Organization for Standardization approved a dedicated code for firearms and ammunition retailers: MCC 5723.
Supporters argued a dedicated code would help banks spot suspicious purchase patterns. Opponents argued it would allow tracking of lawful gun buyers. Both sides took the debate to state legislatures, and that's where it stands today.
Where MCC 5723 stands in 2026
In March 2023, the major card networks paused nationwide implementation of the code, citing the conflicting state laws already taking shape. The national rollout never resumed as originally planned. What exists now is a state-by-state patchwork.
States that require the code
California, Colorado, and New York have passed laws requiring the code's use for in-state firearms retailers. California's law, AB 1587, required acquirers to assign the code to merchants primarily selling firearms or ammunition by May 1, 2025, with penalties for noncompliance. Bank of America's merchant help documentation describes MCC 5723 as a classification for merchants that primarily sell firearms, accessories, or ammunition in those three states.
States that prohibit it
On the other side, a larger group of states has passed laws barring the use of a firearms-specific code or the tracking of firearm purchases by code. The firearms industry's trade association, NSSF, counted 20 such states as of mid-2025, including Texas, Florida, Georgia, Tennessee, Idaho, Montana, Utah, Wyoming, Iowa, and Ohio.
Federal legislation
In July 2026, the U.S. House passed H.R. 1181, the Protecting Privacy in Purchases Act, which would bar a firearms-specific code nationwide. Its Senate companion, S. 1715, had not received a committee hearing at the time of that vote. Until something passes both chambers, the state patchwork controls.
The firearms MCC debate is a fight about data. Your account's stability depends on something more boring: whether your processor knows exactly what you sell, where, and to whom.
What the MCC question means for your account
For most FFLs, the practical question is narrow: what code is your account assigned, and is that assignment correct for your state? If you primarily sell firearms or ammunition from a location in California, Colorado, or New York, expect your acquirer to assign 5723. In states that prohibit the code, it should not be used.
Multi-location sellers face the trickiest version of this. A retailer with stores in Texas and Colorado may have different codes for each location. Ask your processor how each location is coded and get it in writing.
If you sell mostly accessories, optics, or apparel alongside a small firearms line, your primary business may not be firearms at all. That distinction matters in states with a mandate, so describe your sales mix accurately on your application rather than letting a reviewer guess from your homepage.
The code itself rarely decides whether you get approved. What decides approval is the compliance picture behind it. We break down the general approval process in our FFL payment processing guide, while this post stays on the rules your file must reflect.
Federal rules processors expect your checkout to follow
Underwriters don't need you to recite the Gun Control Act, but they do read your website to confirm your sales flow matches it.
Age minimums at the counter and online
Federal law bars licensed dealers from selling a long gun or its ammunition to anyone under 18, and from selling a handgun or handgun ammunition to anyone under 21. Many states set higher minimums or add permit requirements. Your checkout should collect date of birth and apply the right minimum for the product category.
Firearms ship to an FFL, not a front door
When you sell a firearm online to a non-licensee in another state, the gun ships to a licensed dealer in the buyer's state, who runs the background check and completes the transfer. Processors look for a visible FFL-transfer step in your checkout, a dealer locator or dealer-entry field, and clear language that the sale isn't complete until the transfer happens.
Verifying the receiving dealer
Before shipping, you're expected to confirm the receiving dealer's license. ATF's FFL eZ Check system exists for exactly this. Documenting that check on every order protects you in a dispute and shows underwriters you run a disciplined operation.
Ammunition: the rules vary more than most sellers expect
There is no federal background check for ammunition purchases, but federal age minimums for licensed dealers still apply. State law is where ammunition gets complicated.
- California requires ammunition sales to go through licensed vendors with a point-of-sale eligibility check, so online orders are generally shipped to an in-state vendor rather than directly to the buyer. That law has been challenged in federal court: a Ninth Circuit panel struck it down in 2025, and the full court then agreed to rehear the case, Rhode v. Bonta. Check its current status before changing any California shipping rules.
- New York routes ammunition sales through in-state dealers with a background check at pickup.
- Several other states, including Illinois, Massachusetts, New Jersey, and Connecticut, require a state-issued license or ID card for ammunition purchases, which online sellers must verify before shipping.
Processors want to see that your shipping logic blocks orders that can't legally ship to a given address. A store that ships ammunition anywhere without restrictions looks careless, and careless looks risky.
What a processor actually checks when you apply
Firearms underwriting is document-heavy because the sponsor bank needs to prove it knows who it's banking. Expect requests for most of the following:
- Your FFL, and SOT if applicable. A current federal firearms license, plus Special Occupational Tax status if you deal in NFA items such as suppressors or short-barreled rifles.
- State and local licenses. Dealer, ammunition vendor, or business licenses required where you operate.
- Your product catalog. Underwriters look closely at items with heightened legal scrutiny, such as unfinished frames or receivers, which ATF regulates under a rule the Supreme Court upheld in 2025, as well as magazines and firearms restricted in certain states.
- Website compliance. Age gates, FFL-transfer language, state shipping restrictions, a clear refund policy, and accurate contact details.
- Processing history. Prior statements, chargeback ratios, and any account terminations, including whether you appear on the MATCH list.
None of this is a hurdle meant to keep you out. It's the file that lets a bank say yes and stay comfortable saying yes. That is the approach behind our processing for licensed gun and ammunition sellers.
Fraud and chargebacks in firearms sales
Firearms and ammunition are attractive to fraudsters because they're high-value and resellable. Card-testing on ammunition pages and stolen cards on high-ticket firearms are both common enough that underwriters ask how you screen orders.
The FFL-transfer requirement helps you here. A firearm that has to be picked up in person, with ID and a background check, is a poor target for a stolen card. Ammunition and accessories that ship directly to a buyer are where most of the exposure sits.
Layered screening such as address verification, CVV checks, velocity limits, and manual review on first-time large orders keeps that exposure in check. Fraud protection tools built for card-not-present sales are worth setting up before your first busy season, not after it.
Keeping your account stable as the rules shift
The MCC fight isn't over. State laws keep changing, a federal bill is moving, and litigation over ammunition rules is ongoing. You don't control any of that, but you can make sure your processor never has to guess about your business.
Tell your processor when you add a location, change your product mix, or start shipping into a new state. Keep license copies current in your file. Review your MCC assignment once a year. Merchants who do this rarely get the surprise review that ends in a frozen account.
A payment gateway that supports your checkout rules, from age verification to state shipping restrictions, makes that discipline easier to maintain at scale.
Start with a processor that reads your license, not just your keyword
Gather your FFL, any SOT documentation, state licenses, and your last few months of statements. Walk through your own checkout as a buyer in a restrictive state and fix anything that ships where it shouldn't.
Then put that file in front of a team that works with firearms retailers and FFL dealers every day. When you're ready, start your application with Karma Card Payments.