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MCC Codes, short for Merchant Category Codes, are four-digit numbers that are used to categorize businesses into their respective industries. All significant card associations like Visa, American Express, Mastercard, and Discover use these codes. Even though these codes might differ depending on the credit card company, they are instrumental in maintaining a uniform system, especially for opening merchant accounts.
What are MCC codes used for?
MCC codes always show on a merchant statement as a category. Apart from that, banks use them to keep track of changes in consumer buying habits. They help put together all the data and monitor trends in many verticals.
Many well-known banks and credit card companies further scrutinize specific business categories. An example of this is when the nutraceutical market showed growth, banks identified more chargeback cases, so they could respond by categorizing them as high risk.
Who assigns your MCC code?
Your payment processing company chooses the MCC codes. At the initial stages of your application process, your account broker selects a code that goes with your business or service. After that, before the underwriting process, this code is verified by the ISO.
The ISO often tries to fool the system by not giving the code correctly, which classifies your company under a different business category. But the advantage of this is that your merchant account opens up very fast, but the ISO might get in trouble later. For instance, a company will have to comply with a few rules and regulations if they sell CBD online.
How to find your MCC code?
If you want to find your MCC code, you will first have to find out which card company you are working with. This is because, as mentioned earlier, there are different MCC codes for every network.
List of MCC Codes
A list of MCC codes can be found as follows:
When the merchant account is opened is when the type of business is determined. From then on, a company is locked into the code until there are significant changes made to the business. In such a case, that particular business will have to open a new merchant account.
Why is the MCC code important?
From a customer’s perspective, the MCC code is beneficial in determining if you are getting a bonus from your credit card provider. Depending on where you shop, various credit cards offer cashback and other paid features at different rates. Some give the customers the incentive to order food from restaurants, whereas others might incentivize additional gas savings. In any case, based on the MCC code, you can see which kind of business you are spending at.