By Ross Kerber

(Reuters) -Top payment networks including American Express Co, Mastercard Inc and Visa Inc said on Thursday they have paused work on implementing a new sales code for gun merchants, citing Republican pushback in various U.S. states on concerns about improper tracking of consumer behavior.

The Geneva-based International Organization for Standardization (ISO) approved the new merchant category code (MCC) in September to help detect suspicious firearms and ammunition sales to combat gun violence. Bills in several Republican-led states would bar or limit the use of the voluntary code.

A Mastercard representative said on Thursday via email that such bills would cause “inconsistency” in how the code could be applied by merchants, banks and payment networks.

“It’s for that reason that we have decided to pause work on the implementation of the firearms-specific MCC,” said the Mastercard representative, Seth Eisen.

American Express and Visa representatives also cited state bills as driving their decisions.

“There is now significant confusion and legal uncertainty in the payments ecosystem, and the state actions disrupt the intent of global standards. Accordingly, Visa is pausing implementation of the MCC,” Visa said in a statement sent by a spokesperson.

Discover Financial Services said in an emailed statement it was removing the new code from its next network update planned for April “to continue alignment and interoperability with the industry.”

The actions mark a setback for gun-control activists, though the payment networks stopped short of saying they would reject the code outright. The new code adds gun and ammunition shops to a list of hundreds of other types of retailers used to set fees, among other things.

One hope among code supporters is that it could help banks flag cases such as when someone buys a single gun from different stores in order to avoid required forms for multiple purchases.

Gun control activists said the payment card companies were caving in to political pressure, and that critics have misrepresented the surveillance risks of the new code, which cannot track individual items purchased.

“It’s just shameful these companies would buckle to political intimidation,” said Adam Skaggs, chief counsel of the Giffords Law Center, the legal arm of the gun safety organization led by former U.S. Rep. Gabby Giffords, in a telephone interview.

Igor Volsky, executive director of Guns Down America, a group calling for fewer guns and making them harder to get, said it would hold payment companies accountable “for any delays in implementing this common-sense tool” such as by communicating with their shareholders.

Montana Attorney General Austin Knudsen, one of several Republicans who welcomed the news, said in a statement on Thursday that the major credit companies “came to the correct conclusion.”

“However, they shouldn’t just ‘pause’ their implementation of this plan – they should end it definitively,” he added.

While all the top payment networks had said they would adopt the new code only the smallest, Discover, had given a public timetable for doing so, in April, and said it was only following the lead of others.

Bloomberg News earlier reported the implementation pauses by Visa and Mastercard, citing people familiar with the matter. Mastercard’s Eisen noted the code would not allow banks to track specific items purchased by consumers.

“We are committed to working with policymakers and elected officials to contribute to constructive solutions that address the gun violence issue, while respecting important constitutional rights and protections for lawful activities,” he said.

(Reporting by Ross Kerber; Editing by Rosalba O’Brien and Richard Chang)

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