Merchant Category Code (MCC)

Merchant Category Codes (MCCs) are four-digit numbers assigned to a business by credit card networks to categorize the type of products or services it provides. They are used to:

  1. determine the interchange fees merchants are charged.
  2. determine eligibility for cash-back rewards and other credit card perks for consumers.
  3. assist in monitoring and identifying transactions for tax purposes.

MCCs are crucial in the payment processing ecosystem as they help in the classification of the merchant’s business type and the calculation of the appropriate interchange fees.

For example, a grocery store might have a different MCC than a restaurant, and the interchange fees for transactions at these two types of businesses may be different.

Additionally, some card networks offer special programs for businesses in certain MCCs, such as lower processing fees or special promotional offers. Merchants should work with their payment processor or acquiring bank to ensure that they have the correct MCC for their business.