Exclusive-Discover to enable tracking of purchases at gun retailers from April

By Ross Kerber

(Reuters) -Discover Financial Services, a provider of credit cards, told Reuters it will allow its network to track purchases at gun retailers come April, making it the first among its peers to publicly give a date for moving ahead with the initiative, which is aimed at helping authorities probe gun-related crimes.

Discover’s announcement came after the International Organization for Standardization (ISO), which decides on the classification of merchant categories used by payment cards, approved in September the launch of a dedicated code for gun retailers.

Proponents of the move, including gun control activists and Democratic politicians, say it will allow financial institutions to better assist authorities in investigating crimes involving gun violence in the United States.

While the codes will not show specific items purchased, some Republican politicians have spoken out against the move, arguing it could violate the privacy of U.S. citizens lawfully buying guns.

Discover said it will include the new code in its next policy and product update to merchants and payment partners in April.

“We remain focused on continuing to protect and support lawful purchases on our network while protecting the privacy of cardholders,” Discover said in its statement to Reuters.

A Discover spokesperson said following the publication of the story that other payment network companies had already decided to implement the new code in April, and that Discover was following their lead. The Discover spokesperson declined to name those peers.

“We were following the industry for consistent implementation,” the spokesperson said.

Representatives for Discover’s major peers — Visa Inc, Mastercard Inc and American Express Co — declined to comment to Reuters on what their schedules for introducing the new code are. Last fall, the companies said they would work to implement the code while respecting privacy rights.

A representative for Geneva-based ISO said the new code, dubbed “5723 – Gun and ammunition shops” – will be available for financial institutions to use by the end of February.

“The decision to use the new merchant category code is eventually left up to the users in the industry,” the ISO representative said.

Discover handled 2% of the $9.56 trillion purchased on U.S. credit and debit cards in 2022, according to industry researcher Nilson Report. Industry leader Visa had a 61% share, Mastercard 26% and American Express 11%.

(Reporting by Ross Kerber in BostonEditing by Matthew Lewis and Alistair Bell)