Your MCC code is critical to your merchant account. Your code will dictate how much of an interchange fee you will spend when processing credit card transactions. Here are 10 things to know about your MCC Code:
The General Concept
An MCC code is a Merchant Category Code. It is a four-digit number listed under the ISO 18245 standard.
An MCC entails the classification of a business based on the types of goods or services it offers. The four major credit card networks will assign a four-digit MCC to each business that accepts credit cards.
Your business can apply to the Visa, MasterCard, American Express, and Discover card networks to state you wish to accept their credit cards. Each network will review your business based on what it provides and then assign an MCC code to your entity.
A card network will use these codes to categorize and review all purchases on the network. For example, a business listed under the 5074 code will appear as a plumbing and heating equipment business. Meanwhile, a company with the 5462 code will be categorized as a bakery.
How Does This Relate To Your Merchant Account?
Your MCC code is essential to your merchant account, as it will determine what you will spend on interchange fees. You’ll have to pay an interchange fee to handle transactions with particular credit card networks, which will be a percentage of whatever you wish to purchase. A network can charge a specific fee based on your interchange rate. A network may charge a higher rate if it determines your MCC is a high-risk business, for example.
What Is Your MCC?
The process for how to find MCC code data will vary by each card network. You can contact your card network of interest to see what MCC you hold.
Visa offers a supplier locator that lets you search for MCCs in your local area. You could use this to identify your unique MCC.
MasterCard also has an online reference book listing all its MCCs. But MasterCard doesn’t provide any direct ways how you can find specific MCCs in your area.
American Express and Discover do not have any listings you can utilize for how to find MCC code data.
Citi has a full MCC code list to help you identify your code. You can use this list to see the extensive assortment of codes available.
Check Credit Card Statements
One idea for how to find MCC code data is to review credit card statements surrounding purchases at your business. The report will list MCC information, whether it entails a specific code or a category. For example, a floral shop may be listed under either the “Florist” category or under the 5992 code.
Not all credit card statements will be straightforward in listing your MCC. But you can use the report on a statement to figure out what a company might see in your business.
Multiple MCCs In One Place
Your business might have multiple MCCs if you provide different types of products or services. For example, a movie theater might have one MCC for the tickets it sells. But that same theater will have a different MCC for its concessions sales, which may be interpreted as dining instead of entertainment.
Defining Rules For Transactions
Your business might have rules for how certain transactions can work. You might require specific authorization rules to facilitate transactions if your MCC meets certain standards. A card network will review the MCC and determine if it demands specific processing rules.
Used For Rewards
Credit card companies will also use MCC code data to review where people purchase items with their cards. The cards can review the data to determine what rewards a customer may utilize.
For example, a customer might have a card that offers bonus rewards on travel-related purchases. The card company will review the MCC of each business the customer supports and provide the bonus rewards for purchases that meet the qualifying MCCs for the deal. There may be a specific MCC for lodging or air travel services, for example. The card company will issue the bonus rewards if the MCC meets its standards.
Your business could benefit from additional sales if you fall under MCCs that offer special rewards. Customers may be more likely to use their reward cards at your business because they’ll earn extra rewards with purchases from you.
The MCC may also work for tax purposes. It can determine if a payment is for services or merchandise.
For example, it can work in the United States to identify whether someone should report a payment to the IRS. If the payment is for services, the paying party can report this to the IRS for tax purposes. A merchandise payment doesn’t need to be reported.
Be advised when looking at what is MCC code data that your business might fall under a high-risk category. Businesses with high-risk MCCs will pay more in interchange fees and may be subject to additional transaction rules.
High-risk MCCs are for businesses in industries where the risk of cardholder disputes is high. These are fields where chargebacks and other returns are more likely to occur. These are also fields that may be risky for regulatory intentions. Among the fields that qualify for high-risk MCCs are direct marketing activities, telecom services, gambling activities, drugstores and pharmacies, and dating and escort services.
Can You Change Your MCC?
There might be times when you need to use something else on your MCC code list. You might not agree with your current MCC, or you cannot afford the interchange fees for what you have now.
You can directly petition a credit card network for a new MCC. You will require information on your business, what you offer, and what your sales numbers display. It may take months for a network to reply, and there’s no guarantee you’ll get a new MCC.
Check Your Code Today!
Knowing your MCC code can go a long way towards helping you run your business right. Check an MCC code list to see where your business falls.