MCC Codes (Merchant Category Codes)Why Merchants & Cardholders Alike Can Benefit From Understanding Merchant Category Codes

October 11, 2023 | 12 min read

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Merchant Category Code MCC Code

In a Nutshell

Credit card processing can be very complicated. There are lots of rules, counter rules, and codes to remember. Your MCC, or merchant category code, is a good example of this. In this article, we’ll explain where merchant category codes fit in, why they’re important, and where to find them. We’ll also discuss how they affect cardholders and merchants.

Decoding Your MCC Code: How Merchant Category Codes Determine Merchant Status & More

You can think of a merchant category code — commonly known as an MCC or MCC code — as a four-digit identifier that neatly classifies the type of goods or services a business provides.

MCC codes were originally developed for tax reporting purposes. However, these codes have taken on a much broader role in the payments space. They offer valuable insights into cardholders' spending habits, and allow for special promotions based on a merchant’s product vertical. For example, think about when card issuers offer bonus cashback or other rewards for buying certain products. They can even help merchants segment different facets of their business and insulate them against losses.

Now, let's dive into MCC codes, explore their role in transactions, and see how merchants and cardholders alike can leverage them to gain greater insight into the payment space.

What is a Merchant Category Code?

Merchant Category Code

[noun]/mər • chənt • kadə • gôr• ē • kōd/

A merchant category code, or MCC code, is a four-digit identifier that describes the type of goods or services provided by a business. The International Organization for Standardization (ISO) sets MCC meanings and classifications, and card processors are responsible for assigning an MCC to a merchant at the start of their relationship.

Every time you use your credit card, the transaction is labeled with a merchant category code that mirrors the type of business you're dealing with.

MCCs guide card issuers in deciding the rewards that cardholders accumulate for purchases. Additionally, they aid in tax reporting; certain product categories might be subject to specific tax rules or deduction applicabilities, as determined by the MCC. A merchant’s MCC can also influence the fees they pay for card transactions.

It's worth noting that, while many MCCs are standardized across card issuers and networks, some variations might crop up. Businesses that sell a broad spectrum of goods might have multiple MCCs. And remember, as with many standards, these codes can adapt and shift over the years.

How Are Merchant Category Codes Used?

MCC codes have roots in the International Organization for Standardization (ISO) codes and the Standard Industrial Classification (SIC) system. However, card networks sometimes tailor these codes to better fit their specific needs.

Here are a few examples of the ways in which MCC codes can come into play:

  • You possess a credit card that offers 2% cash back on dining. Therefore, any transaction with a merchant designated with MCC code 5812, representing restaurants, should earn you that reward.
  • The interchange fee that a business pays can be influenced by its MCC. For instance, a business flagged under the gas station MCC, but also involved in car rentals, might pay different fee structures compared to a pure-play car rental company.
  • Companies often contract services from freelancers or external entities. It's the company's duty to notify the IRS and provide a 1099 form to the service provider. During credit card dealings, the MCC becomes a handy tool to discern if the transaction merits reporting.

While MCCs aim to categorize businesses accurately, it's not always a perfect match. Some merchants might find their MCC doesn't precisely reflect their primary operations. This can occasionally lead to complications, as we’ll see below.

Common MCC Code Mixups

In theory, a merchant category code identifies the specific category that best describes the business in question. Classifications can be somewhat misleading, though. MCCs are assigned based on merchant products at the time of the request. A change in business direction could leave the merchant with an ill-suited merchant category code.

An example might be a plumber who opens their own shop. The plumber would most likely be assigned MCC code 1711: Heating, Plumbing, A/C. But what happens if, over time, their work evolves to specializing in lawn sprinkling systems? And, when that leads to other lawn care services, and the business eventually morphs into a landscaping company — then what happens? The merchant's line of work would be completely different, but the code would remain the same unless a request to change it is approved.

For another example, companies classified as healthcare-based organizations can accept health-savings cards. But, what if the supermarket where one shops is categorized as a grocery store only, despite having a pharmacy component? The card might not work if they don’t have a distinct MCC for the pharmacy side of the business.

List of MCC Code Ranges

There are hundreds of MCCs published by the ISO. They are not allocated at random, though. Instead, they fall into broad, general ranges based on the first digit of the MCC.

The Merchant Category Code listings for these code ranges are as follows:

MCC Codes (Merchant Category Codes)


Agricultural Services

MCC Codes (Merchant Category Codes)


Contracted Services

MCC Codes (Merchant Category Codes)


Transportation Services

MCC Codes (Merchant Category Codes)


Utility Services

MCC Codes (Merchant Category Codes)


Retail Outlet Services

MCC Codes (Merchant Category Codes)


Clothing Stores

MCC Codes (Merchant Category Codes)


Miscellaneous Stores

MCC Codes (Merchant Category Codes)


Business Services

MCC Codes (Merchant Category Codes)


Professional/Membership Organizations

MCC Codes (Merchant Category Codes)


Government Services

Merchant category codes remain relatively consistent across the board. That said, the codes used by the IRS don’t always match those of the card networks. Those codes used by the card networks don’t always match each other, either. A merchant can have one code with Visa and a different code with Mastercard.

Different locations of the same store could have different MCCs. Or, the store may have multiple MCCs for different products.

A merchant MCC can be changed, but such changes are improbable and infrequent. Merchants are usually stuck with whatever code they’re initially assigned. Since MCC codes serve more than one function, particularly in eCommerce, it’s still important to look at and understand the effects specific codes can have on a business.

How To Lookup a Merchant Category Code

This is trickier than it seems, as this code may not be visible on the merchant’s statement.

The easiest way to find one’s MCC code is to examine the billing descriptor that appears on a customer's statement after completing a transaction. It might show the four-digit code, or it might simply list the category's name. You can then cross-reference the category name with the numeric MCC.

Another option is to search for the merchant category based on the merchant. This tool allows you to search for merchants individually and look up their associated MCC. You can focus your search according to location or a specific company name.

To search, you often only need to enter the company’s zip code. You must make sure that the company name is entered correctly, though. Variances like similar names or franchise businesses can provide erroneous results.

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Why are MCCs Necessary?

TAs mentioned above, the Internal Revenue Service initially introduced merchant category codes to simplify 1099 accounting. This involves reporting payments made to contractors and other miscellaneous income.

In the years since implementation, MCC codes have taken on additional functions that affect the way merchants and cardholders interact with banks and processors. Some providers may offer specialized features to businesses with specific MCCs, for instance. As another example, deciding whether the business has the option to charge a convenience fee for credit card purchases could depend on the MCC assigned to them.

Merchant category codes influence:

Tax Reporting

Only certain items need to be reported via a 1099 form in the US. For example, the IRS doesn’t tax the qualifying products a merchant purchases, only the services. If a business owner buys a new computer, it won’t need to be reported. But, if that same merchant contracts a maintenance specialist to fix the computer, it requires a 1099.

Rather than digging through a year’s worth of individual receipts to try and identify reportable information, the merchant can use the contractor's merchant category code. This lets them quickly and consistently figure out whether business costs are exempt.

Interchange Fees

Merchants pay interchange fees on a per-transaction basis to cover the cost of accepting credit cards. Those fees make up a large percentage of a merchant’s overall card processing costs.

Having the correct code can benefit the merchant here, as certain MCC codes may qualify a merchant for reduced fees. Non-profits, schools, and grocery stores, for example, may receive lower-than-average interchange rates.

Consumer Cash Back & Rewards

MCCs determine how credit card issuers allocate cashback rewards. Merchants or issuers may offer “rewards” cards, for instance, letting cardholders earn points for certain types of purchases, such as an extra 3% on groceries. Gas or travel reward cards are other common examples. These rewards are commonly managed based on the MCC of the place of purchase.

This could be a huge factor for the user, as the points are awarded based on the location of purchase, not the purchase itself. Consider a big box store or wholesale club with more than one MCC code. A cartful of groceries may qualify if you take it through the main checkout. But check out through the store’s garden center, which could have a separate code, and it may not qualify.

High-Risk Merchant Categories

Another thing to note is the MCC’s influence on merchant status. Some processors will use merchant codes to identify high-risk industries. Businesses with high-risk MCC codes must resort to working with high-risk payment processors. This will almost always involve increased processing fees. These merchants may also be subject to monthly sales amount caps or other restrictions.

Merchants with specific merchant category codes are considered a liability because the products or services they offer are commonly associated with high chargeback rates. Thus, MCC codes can exacerbate an already complex situation for high-risk merchants, which we’ll discuss in more detail in the next section.

MCC Codes, Declines, & Chargebacks

Two of the primary ways in which a merchant’s MCC code may negatively impact their business are related to transaction declines and chargebacks.

Transaction declines may happen if a cardholder tried to use a card restricted to only specific merchant category codes. EBT cards, reward cards, or health care savings cards fall under this mantle. So, if a cardholder attempts to use these cards for purchases that are not authorized for that card type, the decline may show up as an MCC code error.

If the merchant in question has any restrictions placed on them due to their MCC code, or if they have recently changed merchant status, these situations can be read as MCC code errors. Ideally, the merchant and their staff should recognize cards that may not be approved for transactions at their establishment.

Merchant category codes directly impact chargeback management, too. As many merchants are already aware, chargebacks take a lot of time and effort to manage. They also represent a substantial drain on the merchant’s finances.

Effective chargeback management can help alleviate many chargebacks that push merchants over the high-risk threshold. If a merchant is locked into a high-risk MCC, though, there may not be much they can do to convince the bank that they don’t represent an elevated risk.

Businesses assigned high-risk MCC codes are subject to higher fees for individual chargebacks. They may become fee-eligible more quickly than other merchants. And, regardless of the merchant’s actual track record with chargebacks, they may be required to set aside funds into a designated reserve account to cover potential future chargebacks.

Have Additional Questions?

Understanding how merchant MCC codes affect operations can help decide whether or not to register as a nonprofit, for instance. It also helps determine whether to request additional MCC codes that apply to an expanding part of the business.

Beyond reaching out to a credit card processor, however, there isn’t much a merchant can do to make the final decision about their MCC code. The decision is based on criteria identified by the credit card processor at the time of application.

At Chargebacks911®, it’s our business to understand the dynamics of the eCommerce business, including how MCCs relate to chargeback issuances. Contact us today to see what we can do to ease the burden of chargebacks.


How do I find my MCC code?

You can find your Merchant Category Code (MCC) by contacting your payment processor or acquiring bank. Alternatively, you can search online databases or tools provided by credit card networks like Visa or MasterCard.

What is the MCC industry code?

The MCC is typically a four-digit number used to classify the type of business based on its primary products or services.

What is an example of a MCC code?

There are hundreds of distinct or MCC codes. It gets rather granular; for example, the MCC for bookstores is 5942. This four-digit number helps classify businesses that primarily sell books.

How do I get a merchant ID number?

A Merchant ID number (MID) is assigned to a business when they set up a merchant account with a payment processor or acquiring bank. This unique identifier distinguishes each merchant within the processing system. The MID is essential for transaction processing and reporting purposes.

What is the difference between MCC and merchant ID?

An MCC is a four-digit number classifying a business based on its primary products or services, helping in transaction categorization and rewards programs. On the other hand, an MID is a unique identifier given to a specific merchant by their payment processor or acquiring bank for transaction processing and reporting. While MCC categorizes the type of business, MID specifically identifies an individual merchant.

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