MCC = Merchant Category Code and it is a four-digit number used by acquiring banks. And also by card schemes to identify a business selling online and is listed in ISO 18245 for retail financial services. MCC is used to classify the business in types of goods or services it markets. You will receive an MCC based on merchant type. (e.g. one for hotels, one for office supply stores, etc.) or by merchant name (e.g. 7273 for Match.com).
MCC codes are assigned to the merchant by the card scheme when the merchant starts applying for merchant accounts. In order to start accepting cards as a form of payment. This code reflects the primary category in which the merchant does business and may be used:
- To predetermine the interchange fee paid by merchant to the card schemes, the riskier the lines of business the higher fees.
- By credit card companies wanting to offer cash back rewards or reward points, for spending in specific categories.
- By card networks to define rules and restrictions for card transactions (for example, Automated Fuel Dispensers (MCC 5542). have specific rules for authorization and clearing messages).
- In the United States, to determine whether a payment is primarily for “services”. Which needs to be reported by the payor to the Internal Revenue Service for tax purposes, or for “merchandise”. Which it does not.
The MCC code given to you by the card schemes and acquiring banks will determine how your transactions are looked upon. So make sure you get the right MCC codes for your projects and save yourself problems.