These days, financial transactions tend to have a lot of moving parts. One of the key elements that some merchants forget about is the merchant category code (MCC). Despite being a relatively obscure concept, MCCs are essential to processing transactions and facilitating a smoother payment experience.
Want to know more about the world of merchant category codes? Read on to learn what they are, why they’re so important, and how to find your own MCC!
What Is a Merchant Category Code?
A merchant category code is a four-digit number that credit card issuers use to classify a purchase based on the type of business involved. MCCs are based on ISO and SIC codes, but card networks are allowed to adapt them for their own purposes. For instance, Visa has consolidated multiple SIC codes into one MCC code to lower the number of MCCs.
Though many MCCs are recognized across all card issuers and networks, some can differ from one another. One common example involves merchants that offer a range of services and products getting assigned multiple MCCs. The codes can also change over time.
Why Are MCCs Important?
MCCs come with a variety of benefits for merchants, including:
- Better fraud protection
- More precise accounting
- Simplified tax reporting
- Favorable payment processing fees
MCCs also allow you to control card usage by blocking or allowing specific business types. For example, if you own a taxi reservation platform, you can limit card usage to limousine and taxi-related MCCs. These codes also allow you to track cardholder spending and make it easier to reward your cardholders, such as by triggering cashback rewards.
Keep in mind that having a high-risk MCC can impact your business in several key ways. On top of paying higher fees for credit card transactions, you may not have the same level of fraud protection as other businesses.
How to Find and Verify Your MCC
Knowing your MCC is essential for any merchant, as it determines your business type and ensures you’ll pay the correct fees. The easiest way to find your MCC is to contact your payment processor. Since they handle your card transactions, they’re a reliable source for your MCC. They can also confirm that your code fits your business type.
Another way to find your MCC is to check your merchant agreement. This document contains all the key information about your processing arrangement, which should include the MCC. Pay particular attention to the sections related to fee structures or transaction types.
Finally, you can use online MCC lookup tools. These tools provide detailed lists of MCCs categorized by business type. With a few clicks, you should be able to easily match your business to the appropriate MCC.
Understanding your Merchant Category Code (MCC) isn’t just a technical detail, it can impact your processing fees, chargeback risks, and even your ability to qualify for certain pricing programs. At MONA Payment Solutions, we help business owners make sense of these behind-the-scenes details to ensure smoother, more cost-effective transactions. If you’re unsure about your MCC or how it affects your business, reach out to our team for a quick assessment and expert guidance.