How to find a business merchant category code

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Merchant category codes — or MCCs — are codes that affect how credit cards are used. On the business side, MCCs affect the interchange rates and card processing fees a retailer or supplier pays for the products or goods it sells. They also affect how the IRS classifies businesses and the taxes those businesses owe. And for consumers looking to maximize credit card rewards, MCCs impact the way cardholders are rewarded for the purchases they make.

We break down the types of merchant category codes you’ll run into most often, as well as how to find out which one corresponds to a certain store or service.

What is a merchant category code?

A merchant category code is a four-digit number used by credit card companies to classify businesses. A business MCC indicates the types of services or goods being sold to customers.

If a business sells both services and products, the MCC typically reflects the business type that makes up the dominant proportion of its sales.

In some cases, a business can request an additional MCC for a different set of services under its brand. For example, a superstore that includes both a grocery store and a pharmacy in one location may have different MCCs for each service within the building.

Card issuers also use MCCs to track consumer spending. Cardholders can leverage them to see which retailers might earn them the strongest cash back, according to their cards’ bonus categories.

Common merchant category codes

MCCs vary by card processor, though they tend to be similar to the following merchant categories from Citi:

Within each category, you can find more detailed individual codes that narrow down more nuanced types of businesses, like parking lots and garages, souvenir shops and even watch and jewelry repair.

Where to find a merchant category code

If you’re a merchant, you can contact your credit card processor — such as Visa or Mastercard — and ask how to find your business’s MCC. You can also search online for your processor’s merchant category codes as well — for example, just type in, “American Express merchant category codes.”

If you’re a credit card holder, you can review your bank or credit card statement. Near each purchase, you should see a “merchant description,” which includes either the four-digit merchant code or the name of the category itself. If you want to find out the code before you make a purchase, you can also contact the business and ask them what category they typically fall under. While the code from their processor might not line up exactly with your processor’s code, they’ll likely be able to let you know what kind of spending category your purchase might show up in.

Why is it important to know your MCC?

MCCs matter to business owners, business credit card holders and savings-seekers looking to get the most value out of their personal rewards cards.

Why MCCs are important for business owners

As a business owner, you should know your MCC for a variety of reasons, including the following:

• Tax purposes: MCCs can help business owners to determine whether they can report certain payments on a Form 1099-MISC.
• Convenience fee charges: MCCs also affect how and when businesses can charge a convenience fee on credit card payments.
• Risk management: Some card companies use MCC classifications to increase transaction fees and rates for “high risk” businesses like pawn shops and airlines. Other codes, like those for elementary schools or nonprofit organizations, qualify for lower interchange fees as a public service or charity.
• Payment acceptance: A merchant code can also affect payment acceptance. For example, for a healthcare business to accept payment from a health savings account, the business must qualify for a specific MCC that classifies it as a healthcare business.

Misclassification by way of an incorrect MCC could mean paying more on rates and fees than you need to, so you’ll want to review your code and report any errors to your issuer or processor immediately.

Why MCCs are important for cardholders

MCCs are important for both those with business cards and those with personal cards.

On the business credit card side, MCCs can help you navigate your taxes. The IRS requires businesses to report payments that have been made for services, but not for the purchase of goods. MCCs help business cardholders to understand which payments they can report on Form 1099-MISC as a result.

On the personal credit card side, understanding MCCs can help you maximize your credit card rewards. If your rewards credit card earns you points, miles or cash back for certain retail categories, such as restaurants or grocery stores, you can leverage MCCs to identify which retailers will earn you the most cash back, according to your card’s bonus categories.

For example, lots of places sell food, but not all are classified as grocery stores or restaurants by credit card companies. Target and Walmart, for instance, are often categorized as “superstores,” rather than grocery stores, by rewards credit cards issuers. This means that, even if you use your card for groceries at a superstore, you won’t actually be able to earn your bonus rewards. To maximize the rewards you can earn at a superstore, you can instead try to use a flat-rate credit card or choose a credit card that specifically includes superstores.

The bottom line

Merchant category codes are only four digits, but affect many areas of how businesses operate, including the payments they can receive, the taxes they pay and how they’re classified for card rewards. Consumers can also use MCCs to their advantage by leveraging them to maximize their credit card rewards.

You can find a business’s MCC by searching for a specific issuer’s merchant category codes online, reviewing your processor or card statement or by calling the number on the back of your credit card. You can also reach out to a business and ask them what category they typically fall into when it comes to consumer purchases.

Frequently asked questions (FAQs) about MCCs

• How does a high-risk MCC affect a business?

  A high-risk MCC classification can affect businesses in four key ways:

  • High-risk businesses may pay higher interchange rates than low-risk businesses.
  • High-risk businesses may not be able to receive the same e-commerce fraud protections other businesses are extended for card-not-present purchases.
  • Fees on individual chargebacks may be higher for high-risk businesses than for their low-risk counterparts.
  • Certain payments may not be accepted by high-risk merchants at all.

• Why doesn’t the MCC match up with the store service?

  Say you swipe your credit card at a convenience store that has a couple of gas pumps outside. You might think you’ll earn the same points or miles as you would at any other gas station, but that might not be the case if the MCC doesn’t classify the business as a gas station. Generally, whatever service makes up the majority of the business influences the MCC.

• Can an MCC lead to declined transactions?

  Yes, but only if a credit card has an MCC restriction. For example, you can only use a health savings account card at a merchant with a healthcare MCC designation.