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Committee rejects bill aimed at banning payment-network tracking of firearm purchases
Summary
The House committee rejected HB 1443, a bill that would have barred payment networks and banks from using merchant-category or similar codes to track firearm and ammunition purchases, after bankers warned the measure would impose compliance risks on small community banks.
The House Insurance & Commerce Committee voted down HB 1443 on a voice vote after an extended hearing that included industry testimony and public witnesses.
Representative Pilkington presented the bill as a preventive measure intended to prohibit payment networks, processors and financial institutions from using merchant category codes (MCCs) or similar markers to single out firearm or ammunition purchases. “We are trying to be preventative,” Pilkington said, arguing the bill would bar what supporters describe as a potential backdoor to create registries via payment data and would create civil penalties for violations.
The bill drew substantial opposition from community bankers and trade representatives who said the proposal would create severe compliance problems for small banks that do not control card-network code assignment and often rely on third-party vendors for payment processing. Lori Trogdon, president and CEO of the Arkansas Bankers Association, told the committee the association supported the narrower measure Arkansas passed earlier in the session and urged against HB 1443 because it could expose community banks to liability without giving them control of the underlying processing systems. “A vote no for this bill would be to support your community banks,” Trogdon told the panel.
Community bankers testified they lack direct control over MCC assignments and often have long-term vendor contracts they cannot terminate without heavy penalties. Cathy Owen of Eagle Bank and Trust said small banks often cannot reach the major card networks directly and could be found in violation even if they had no role in assigning any tracking codes. Catherine Mitchell of Reliance Bank said community banks are frequently affiliate members that rely on processors and do not act as card processors themselves.
Representative Pilkington said 18 other states have enacted laws addressing similar concerns and that the bill is intended to close what she described as a potential loophole in an earlier state law (House Bill 15-09). Pilkington and supporters said they sought to protect Arkansas residents from what they view as discriminatory payment practices driven by ESG or other non-financial scoring.
After public testimony and a committee discussion, Representative McCollum moved that the committee pass HB 1443; the motion failed on a voice vote when opponents objected. The clerk recorded the outcome as “The noes have it. The bill is filed.”
Committee members asked whether smaller banks could obtain reporting capabilities from their payment vendors; bankers said options exist but can be costly and depend on the bank’s membership status with card networks. The record shows the committee considered due-process and enforcement provisions in the bill versus an alternative statute already adopted earlier in the session.
