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- A merchant category code — or an MCC — is a four-digit number used by credit card companies to classify businesses for payments, taxation and rewards purposes.
- MCCs affect the interchange rates and fees businesses pay, how the IRS classifies a business for tax purposes and how customers are rewarded on the purchases they make.
- You can find a business's MCC by calling your processor, reviewing your card statement or by calling the number on the back of your card.
Merchant category codes — or MCCs — are four-digit codes that affect how credit cards are used in multiple ways. On the business side, MCCs affect the interchange rates and card processing fees a retailer or supplier pays for the products or goods it sells. They also affect how the IRS classifies businesses and the taxes those businesses owe. And for consumers looking to maximize credit card rewards, MCCs impact the way cardholders are rewarded for the purchases they make.
What is a merchant category code?
A merchant category code is a four-digit number used by credit card companies to classify businesses. A business MCC indicates the types of services or goods being sold to customers.
If a business sells both services and products, the MCC typically reflects the business type that makes up the dominant proportion of its sales.
In some cases, a business can request an additional MCC for a different set of services under its brand. For example, a superstore that includes both a grocery store and a pharmacy in one location may have different MCCs for each service within the building.
Card issuers also use MCCs to track consumer spending. Cardholders can leverage them to see which retailers might earn them the strongest cash back, according to their cards’ bonus categories.
Common merchant category codes
MCCs vary by card processor, though they tend to be similar to the following merchant categories from Citi.
|Merchant code range
|Retail outlet services
|Professional services and membership organizations
Within each category, you can find more detailed individual codes that narrow down more nuanced types of businesses, like parking lots and garages, souvenir shops and even watch and jewelry repair.
Where to find a merchant category code
If you’re a merchant, you can contact your credit card processor — such as Visa or Mastercard — and ask how to find your business’s MCC. You can also search online for your processor’s merchant category codes as well — for example, just type in, “American Express merchant category codes.”
If you’re a credit card holder, you can review your bank or credit card statement. Near each purchase, you should see a “merchant description,” which includes either the four-digit merchant code or the name of the category itself.
Why is it important to know your MCC?
MCCs matter to business owners, business credit card holders and savings-seekers looking to get the most value out of their rewards cards.
MCCs can help business owners to determine whether they can report certain payments on a Form 1099-MISC. MCCs also affect how and when businesses can charge a convenience fee on credit card payments.
MCCs can also affect risk measurement. For example, some card companies use MCC classifications to increase transaction fees and rates for “high risk” businesses like pawn shops and airlines. Other codes, like those for elementary schools or nonprofit organizations, qualify for lower interchange fees as a public service or charity.
A merchant code can also affect payment acceptance. For example, for a healthcare business to accept payment from a health savings account, the business must qualify for a specific MCC that classifies it as a healthcare business.
Misclassification by way of an incorrect MCC could mean paying more on rates and fees than you need to, so you’ll want to review your code and report any errors to your issuer or processor immediately.
The IRS requires businesses to report payments that have been made for services, but not for the purchase of goods. MCCs help business cardholders to understand which payments they can report on Form 1099-MISC as a result.
If you own a business or personal rewards credit card that earns you rewards for certain retail categories, such as restaurants or grocery stores, you can also leverage MCCs to identify which retailers will earn you the most cash back, according to your cards’ bonus categories. For example, lots of places sell food, but not all are classified as grocery stores or restaurants by credit card companies. Target and Walmart, for instance, are often categorized as “superstores,” rather than grocery stores, by rewards credit cards issuers. This means that, even if you use your card for groceries at a superstore, you won’t actually be able to earn your bonus rewards.
The bottom line
Merchant category codes are only four digits, but affect many areas of how businesses operate, including the payments they can receive, the taxes they pay and how they’re classified for card rewards.
For consumers, you may be able to leverage MCCs to maximize your card’s rewards.
You can find a business’s MCC by searching for a specific issuer’s merchant category codes online, reviewing your processor or card statement or by calling the number on the back of your credit card.
Frequently asked questions
A high-risk MCC classification can affect businesses in four key ways:
- High-risk businesses may pay higher interchange rates than low-risk businesses.
- High-risk business may not be able to receive the same e-commerce fraud protections other businesses are extended for card-not-present purchases.
- Fees on individual chargebacks may be higher for high-risk businesses than for their low-risk counterparts.
- Certain payments may not be accepted by high-risk merchants at all.
Say you swipe your credit card at a convenience store that has a couple of gas pumps outside. You might think you’ll earn the same points or miles as you would at any other gas station, but that might not be the case if the MCC doesn’t classify the business as a gas station. Generally, whatever service makes up the majority of the business influences the MCC.
Yes, but only if a credit card has an MCC restriction. For example, you can only use a health savings account card at a merchant with a healthcare MCC designation.