Understanding MCCs is important for businesses and cardholders a like.
Dear Your Business Credit,
How can I find the merchant category code of any business before I actually do the transaction? The tellers don’t even have an idea of what I am talking about in most cases. Thanks for your help! – Adi
I can see why you’re frustrated. Fortunately, you don’t have to rely on company representatives to find merchant category codes, or MCCs.
What is a merchant category code?
For the benefit of readers who aren’t familiar, a merchant category code (MCC) is a four-digit number the major credit card networks (Visa, Discover, American Express and Mastercard) assign to every business that applies to accept credit cards. The number corresponds to the type of business or service the company offers.
Credit card networks use MCCs to categorize and track purchases. When a purchase is added to your statement, the category assigned to it, such as “building materials” or “advertising services” is tied to the merchant category code. Major airlines and hotels each have their own MCC code.
List of merchant category codes
MCCs can vary by processor, but there are some common trends. Here are some common merchant categories, provided by Citi:
- Agricultural services: MCCs 0001-1499
- Contracted services: MCCs 1500-2999
- Transportation services: MCCs 4000-4799
- Utility services: MCCs 4800–4999
- Retail outlet services: MCCs 5000–5599
- Clothing stores: MCCs 5600–5699
- Miscellaneous stores: MCCs 5700–7299
- Business services: MCCs 7300–7999
- Professional services and membership organizations: MCCs 8000–8999
- Government services: MCCs 9000–9999
How to look up a business’s MCC
So, how do you look up the MCCs of a particular business? Each card network has its own list, though many codes are shared among the networks. As a result, a merchant may have a different code with Visa than with Mastercard, for instance.
Other online resources beyond the guide provided by Citi include the Visa Supplier Locator Tool, the Visa Merchant Data Standards Manual and the Quick Reference Booklet – Merchant Edition for Mastercard.
If you make purchases for your business, merchant category codes can also help you maximize your credit card rewards. The rewards programs for certain cards will give you points for purchases that are in certain coding categories. Paying attention to how your card is categorizing a purchase can help you get more points, especially if you patronize a particular merchant regularly.
Why becoming familiar with MCCs matters
Becoming familiar with MCC codes is important for both business owners and consumers. If you run a business where you are paid by credit card, your MCC will determine how much it costs you to process credit cards. Businesses with “high-risk” MCCs generally pay higher fees and often need to shop around for a merchant processing contract designed for those in this category.
The MCCs on your statements also come into play when it is time to file your taxes. They help determine whether the bank that transfers the money from credit card transactions to your bank account will need to report them to you on Form 1099-MISC. For more information, see the IRS’s Payment Card Transactions FAQs.
Knowing MCCs can also help cardholders maximize rewards. For example, if your card gives you rewards for restaurant spending, you might want to pay attention to whether a fast-food restaurant attached to a gas station counts as a restaurant or “fuel” and only use that card at the eatery if the gas station location counts as a restaurant, for instance.
When in doubt, you can always ask the merchant if they know the code or make a small purchase to find out how it is categorized on your card. The employees may not be familiar with the MCC, but the owner of the business probably will be more aware.
That said, you probably won’t be able to make huge inroads in racking up rewards points this way, but even a few extra points here and there can add up over time. Good luck!