MCC Codes

What are Merchant Category Codes (MCC)?

MCC stands for Merchant Category Codes. An MCC code is a four-digit universal number used to categorize businesses in specific industries. This code is used by all major credit card providers – Visa, Master Card, American Express, and Discover. The codes may be different per credit card company, but for each one, they help maintain a uniform system for opening merchant accounts.

What Are MCC Codes Used For?

MCC codes will appear on a merchant statement as a category. Additionally, banks use them to monitor changes in consumer purchasing habits. They help aggregate data and track trends in various verticals.

Major credit card companies and banks investigate if they need to more closely monitor certain business types. For example, as the nutraceutical market grew, banks saw higher cases of chargebacks and were able to respond by classifying these companies as high risk.

Who Assigns Your MCC Code?

An MCC code is selected by your payment processing company. At an early stage of the application process, your account broker picks the most accurate code that reflects your business or service. This code is verified by the ISO before the underwriting process.

ISO's sometimes try to game the system by misrepresenting a code and classifying your company as a different business. In turn, they will open a merchant account fast, but as a result, they may get in trouble down the line. For example, if a company is selling CBD online, there are specific regulations they will have to follow.

How to Find Your MCC Code

To find your MCC code, you'll want to know which card network you are working with. As mentioned before, there are different MCC codes for each network. However, the IRS has its own list of MCC codes that you can use to categorize your business.

The type of business entity is determined when the merchant account initially opens. From there, a business is locked into the MCC code unless their business changes substantially, in which case, they may need to open a new merchant account altogether.

Why Is the MCC Code Important?

On the customer side, the MCC code can help you determine if you're getting a bonus from your credit card provider. Many credit cards offer cashback or other features that are paid out at different rates based on where you shop. Some incentivize ordering food from restaurants, while others may offer extra savings on gas. Either way, you can see which type of business you're spending money at based on the MCC code.