Understanding Merchant Category Codes (MCC): A Comprehensive Guide
Merchant Category Codes (MCCs) are critical components of the payment processing ecosystem. They classify businesses by the type of goods or services they provide, influencing everything from interchange rates to tax reporting. This article will explore the significance of MCCs, how they impact businesses, and provide a detailed list of almost 10,000 MCCs.
What Are Merchant Category Codes (MCCs)?
Merchant Category Codes (MCCs) are four-digit numbers assigned to businesses by credit card networks such as Visa, Mastercard, American Express, and Discover. These codes categorize the type of goods or services a business offers. MCCs are used by credit card companies to determine interchange fees, rewards eligibility, and even to track transactions for tax purposes.
Key Facts:
- First Introduced: MCCs were introduced in 2004 to simplify tax reporting and payment processing.
- Purpose: MCCs help credit card networks classify transactions for processing fees and IRS reporting.
- Global Standards: The International Organization for Standardization (ISO) sets these codes, although each card network may have specific variations.
Why MCC Codes Matter
MCCs are more than just a classification system; they have a direct impact on a business’s bottom line. The right MCC can lower interchange fees, while an incorrect MCC can result in higher fees and potential issues with chargebacks.
Impacts of MCC Codes:
- Interchange Fees: MCCs determine the interchange rate applied to transactions. For example, non-profit organizations often benefit from lower rates.
- Rewards and Loyalty Programs: Consumers earn rewards based on MCCs, influencing their spending behavior.
- Tax Reporting: MCCs simplify the 1099-K tax form reporting for businesses.
Detailed MCC Code List
Below is a comprehensive table listing the most common MCCs. This table serves as a valuable resource for businesses and financial professionals alike.
| MCC | Description |
|---|---|
| 0742 | Veterinary Services |
| 0763 | Agricultural Cooperatives |
| 1520 | General Contractors – Residential and Commercial |
| 1711 | Heating, Plumbing, Air Conditioning Contractors |
| 1731 | Electrical Contractors |
| 1799 | Special Trade Contractors, Not Elsewhere Classified |
| 2741 | Miscellaneous Publishing and Printing |
| 2791 | Typesetting, Plate Making, and Related Services |
| 2842 | Specialty Cleaning, Polishing, and Sanitation Preparations |
| 3000 | Airlines, Not Elsewhere Classified |
| 3001 | American Airlines |
| 3002 | Delta Airlines |
| 3003 | United Airlines |
| 3004 | Southwest Airlines |
| 3351 | Car Rentals – Avis |
| 3352 | Car Rentals – Hertz |
| 3353 | Car Rentals – Budget |
| 3501 | Lodging – Sheraton Hotels |
| 3502 | Lodging – Hilton Hotels |
| 3503 | Lodging – Marriott Hotels |
| 4111 | Local and Suburban Commuter Passenger Transportation |
| 4112 | Passenger Railways |
| 4119 | Ambulance Services |
| 4121 | Taxicabs and Limousines |
| 4812 | Telecommunication Equipment and Telephone Sales |
| 4814 | Telecommunication Services, Including Local and Long Distance |
| 4899 | Cable, Satellite, and Other Pay Television and Radio Services |
| 4900 | Utilities – Electric, Gas, Water, Sanitary |
| 5045 | Computers, Peripheral Equipment, Software |
| 5047 | Medical, Dental, Ophthalmic, and Hospital Equipment and Supplies |
| 5111 | Stationery, Office Supplies, Printing, and Writing Paper |
| 5122 | Drugs, Drug Proprietors, and Druggist Sundries |
| 5131 | Piece Goods, Notions, and Other Dry Goods |
| 5309 | Duty-Free Stores |
| 5310 | Discount Stores |
| 5311 | Department Stores |
| 5411 | Grocery Stores, Supermarkets |
| 5541 | Service Stations (with or without ancillary services) |
| 5542 | Automated Fuel Dispensers |
| 5732 | Electronics Stores |
| 5733 | Music Stores – Musical Instruments, Pianos, Sheet Music |
| 5912 | Drug Stores and Pharmacies |
| 5931 | Second-Hand Stores |
| 5999 | Miscellaneous and Specialty Retail Stores |
| 6010 | Financial Institutions – Manual Cash Disbursements |
| 6011 | Financial Institutions – Automated Cash Disbursements |
| 6513 | Real Estate Agents and Managers – Rentals |
| 7011 | Lodging – Hotels, Motels, Resorts |
| 7216 | Dry Cleaners |
| 7273 | Dating and Escort Services |
| 7296 | Clothing Rental – Costumes, Uniforms |
| 7392 | Consulting, Public Relations |
| 7512 | Automobile Rental Agency |
| 7841 | Video Tape Rental Stores |
| 7922 | Theatrical Producers (Except Motion Pictures), Ticket Agencies |
| 7995 | Betting, Including Lottery Tickets, Casino Gaming Chips |
| 8062 | Hospitals |
| 8211 | Elementary and Secondary Schools |
| 8220 | Colleges, Universities, Professional Schools |
| 8398 | Charitable and Social Service Organizations |
| 8641 | Civic, Social, and Fraternal Associations |
| 8651 | Political Organizations |
| 8661 | Religious Organizations |
| 8675 | Automobile Associations |
| 8699 | Membership Organizations, Not Elsewhere Classified |
| 8911 | Architectural, Engineering, and Surveying Services |
| 8931 | Accounting, Auditing, and Bookkeeping Services |
| 8999 | Professional Services, Not Elsewhere Classified |
| 9311 | Tax Payments |
| 9399 | Government Services, Not Elsewhere Classified |
| 9402 | Postal Services – Government Only |
| 9700 | Automated Referral Service |
| 9950 | Intra-Company Purchases |
Note: This list includes just a portion of the nearly 10,000 available MCCs.
Importance of Correct MCC Assignment
Assigning the correct MCC to your business is crucial. An incorrect MCC can result in:
- Higher Interchange Fees: For instance, a high-risk MCC might be assigned a higher fee rate.
- Inaccurate Tax Reporting: Incorrect MCCs can lead to discrepancies in tax filings.
- Increased Chargeback Risks: Certain MCCs are more prone to chargebacks, which can hurt a business’s reputation and financial standing.
To help businesses navigate the complexities of MCCs, organizations like Merchanto.org offer valuable resources and support. Merchanto.org, an official partner of Visa and Mastercard in the chargeback prevention sector, provides tools to ensure businesses are correctly categorized and protected from unnecessary chargebacks. Learn more about their services.
How to Find or Verify Your MCC Code
Finding or verifying your MCC code is essential for accurate transaction processing. Here are the steps you can take:
- Check Your Merchant Statement: Your monthly statement should list your assigned MCC.
- Contact Your Payment Processor: They can provide details on the MCC assigned to your business.
- Use Online MCC Lookup Tools: Some websites offer MCC lookup tools where you can enter your business type to find the corresponding MCC.
Impact of MCC Codes on Business Operations
Interchange Rates:
- Lower Rates for Certain Industries: Healthcare and education services often benefit from lower interchange rates.
- High-Risk Categories: Industries like gambling and adult entertainment may face higher fees due to the associated risks.
Chargeback Risk:
- High-Risk MCCs: MCCs related to online gambling, travel services, and direct marketing are more prone to chargebacks.
- Protection Measures: Utilizing services like those offered by Merchanto.org can help mitigate these risks.
Rewards Programs:
- Influence on Consumer Behavior: MCCs influence the rewards that consumers earn, which can affect purchasing decisions. For example, grocery store purchases often offer higher reward points compared to other categories.
FAQs on Merchant Category Codes
- What happens if my business is assigned the wrong MCC?
- It can result in higher fees and incorrect tax reporting, potentially leading to audits or penalties.
- Can I change my MCC code?
- Yes, by contacting your payment processor and providing evidence that your business has changed its primary services.
- How does my MCC code affect customer transactions?
- Certain cards may offer rewards or benefits based on the MCC, influencing how customers choose to pay.
Conclusion
Merchant Category Codes play a pivotal role in the payment processing ecosystem. From determining interchange rates to influencing customer rewards, the correct MCC is crucial for any business. By understanding and properly managing MCCs, businesses can optimize their operations, reduce costs, and minimize risks.
