Merchant Category Codes (MCCs)

About Merchant Category Codes (MCCs)

Merchant Category Codes (MCCs) are four-digit numbers assigned to a business by credit card companies (such as Visa and Mastercard) when the business first starts accepting credit cards as a form of payment. These codes are used to classify the business by the type of goods or services it provides.

This list of MCCs is maintained from public card-network and standards references. Each MCC is associated with a specific type of business or service, making it easier to identify and categorize transactions.

Why are MCCs Important?

Because MCCs are useful for card issuers:

• Many credit card reward programs are based on MCCs. For example, a card might offer extra points for purchases at grocery stores or gas stations, identified by their MCCs.
• MCCs assist in detecting fraudulent activities. Unusual MCCs in a user's transaction history can trigger alerts for potential fraud.
• Some cards have restrictions on certain types of merchants. MCCs help enforce these restrictions by identifying the type of merchant.
• MCCs can help categorize expenses for recordkeeping, but tax treatment depends on the transaction, jurisdiction, and whether the purchase is personal or business-related.

High-Risk MCCs

High-Risk MCCs represent categories of businesses often associated with higher fraud rates or regulatory issues. As a result, these MCCs may be monitored closely or blocked by financial institutions. They are divided into two categories, registration-required and registration-free.

Registration-required MCCs, colored red, require the merchant to complete a special onboarding process with the card network for strict compliance monitoring. They often operate under the most intense scrutiny from regulatory bodies due to the potential for illegal activity or harm if not properly controlled.

Registration-free MCCs, colored yellow, are not dangerous industries, but they are associated with higher amounts of chargebacks and disputes, so a payment processor specializing in high-risk industries is still necessary. Most of these MCCs are not blocked by card issuers.

If a card transaction is always declined at a particular merchant, it is probably because the card issuer has blocked transactions to merchants with that particular MCC.