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Merchant Category Codes Explained

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Last editedNov 20212 min read

Businesses that accept credit card payments and individuals that are looking to maximise their credit card rewards should pay attention to merchant category codes. Also known as MCC codes, these four-digit numbers are used to categorise companies into different market segments.

The reason why these are important is that credit card providers often offer different customer incentives based on the market segment. Certain MCC codes will earn users more reward points. In addition, some companies will provide their employees with corporate credit cards and block certain MCC codes. What’s more, they can also have an impact on your risk assessment and therefore transaction fees. Read on to find out more about merchant category codes and how they affect your business.

What is a MCC code?

As previously mentioned, a MCC code is made up of four digits. These identifiers are used by credit card companies to divide the market into different segments, and each company will be assigned a code depending on the segment it belongs to. These can affect a number of different things, such as interchange fees, tax payments and credit card rewards for customers.

The codes are quite specific to the individual business type, but there are larger grouping methods that are used to organise them. For example, 5533 refers to automotive parts and accessories stores. Many other businesses relating to automobiles and vehicles also begin with 5, including boat dealers (5551), automotive tyre stores (5532) and motorhomes dealers (5592). To find out more, you can look up merchant category code lists on search engines or the credit card provider’s website.

How to find merchant category codes

Now that you know what they are, it’s also important to understand how to find MCC codes. The best way to go about this is by contacting your credit card provider (such as Visa or Mastercard) and asking them to verify your company’s MCC code.

If you’d like to look it up yourself, you can also find merchant category code lists on the credit card provider’s website. These lists are extensive and can take a while to sift through, so it’s often quicker and more accurate to simply contact the provider with specific questions.

Why is it important to know your MCC code?

You might be wondering why it’s important to know how to find MCC codes. Well, they can have a significant impact on different areas of your business operations.

Firstly, merchant category codes can have an influence on your risk assessment. Credit card providers use these codes to categorise the risk level of different businesses and may increase transaction rates and fees based on them. For example, airlines are considered a high-risk business and will therefore have to pay greater fees on their credit card transactions. In addition, some organisations like charities and schools may qualify for lower fees based on their MCC code.

Merchant category codes will also affect whether certain payments can be accepted. Certain accounts can only make payments to businesses in a specific sector. For example, to make payments from a health savings account, the company may need to have an MCC code that designates it as a healthcare business.

What happens if my business has a high-risk MCC code?

If you’ve discovered that your business has a high-risk MCC, there are a number of different effects on your business.

Firstly, as previously mentioned, you will be required to pay higher transaction fees on your credit card payments. In addition, you may not be able to access the same fraud protection as some other businesses, and fees may be higher for individual chargebacks. Finally, some high-risk MCC codes may not be accepted by certain merchants altogether.

For these reasons, it’s essential to find out your merchant category code and consider how this may impact your business.

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