A provision in LB686 changes how payment processors can classify firearm retailers—and it matters for your business operations.
Most Nebraska retail owners don't realize that payment processors have been able to assign special merchant category codes (MCCs) that single out firearm retailers for separate tracking and monitoring. LB686 changes that.
Here's what you need to know if you sell firearms or operate a retail business in Nebraska.
LB686 prohibits payment processors and acquirers—the companies that handle credit and debit card transactions—from assigning a distinct merchant category code specifically for firearm retailers. In plain terms: payment processors can no longer tag your business with a special code that marks you as a firearms dealer.
This matters because merchant category codes are how payment networks organize and track different types of businesses. When a processor assigns a unique code to firearm retailers, it creates a separate classification that can trigger additional monitoring, reporting requirements, or restrictions on payment services.
The law applies to "covered entities"—payment processors, card acquirers, and similar financial service providers that process card transactions. If you accept credit or debit cards, your payment processor is a covered entity under this law.
The provision is most directly relevant to:
However, the principle affects all Nebraska retailers: it establishes that payment processors cannot create special classification codes for specific legal business types.
A distinct merchant code for firearm retailers could result in:
By prohibiting this classification, LB686 removes a potential operational and compliance risk. Firearm retailers can no longer be singled out for differential treatment based solely on their industry classification.
This provision is found in Section 1, subsection (2)(c) of LB686, on page 3 of the bill. The law prohibits covered entities from "assigning or using a merchant category code that distinguishes firearm retailers."
For the effective date and any implementation timeline, refer to the bill's general provisions section, as the effective date may differ from the bill's enactment date.
If you operate a firearm retail business, review your current merchant account and payment processing agreement. You don't need to take immediate action, but it's worth confirming with your payment processor that you're not being classified under a firearms-specific code. If you are, the law now prohibits that practice.
For non-firearm retailers, this provision reinforces that payment processors cannot create special classification codes for your legal business type.
Source: LB686, Section 1, subsection (2)(c), Nebraska Legislature.