Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Home
  • Economics, Finance, & Analytics
  • Banking, Lending, and Credit Industry

Merchant Category Codes - Explained

What is a Merchant Category Code?

Written by Jason Gordon

Updated at April 18th, 2022

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is a Merchant Category Code?How Does a Merchant Category Code Work?How Merchant Category Codes Can Boost Credit Card Rewards

What is a Merchant Category Code?

A Merchant category code (MCC) is a four-digit code used to categorize the specific services and transactions that consumers complete using their credit cards. MCCs are used by credit card issuers or companies such as Visa, MasterCard, Discover, American Express, and others to classify specific transactions executed on a credit card. Merchant Category Codes are also used to classify businesses based on the types of goods or services they provide. Credit card companies assign MCC to determine whether the type of business a company operates is legal or not. Illegal business transactions are reported to the IRS by credit card issuers.

Back to:BANKING, LENDING, & CREDIT INDUSTRY

How Does a Merchant Category Code Work?

There are several classifications under the Merchant category code (MCC), such as A-allowable, P-prohibited, R-restricted, and others. MCC are four digits codes generated by credit card companies to categorize services and transactions executed by consumers and businesses. There are many importance of MCC, credit card companies also use these for digit codes to determine the percentage of a transaction that a business must remit to them. With the MCC, illegal or fraudulent business transactions can easily be reported to the Internal Revenue Service. Businesses whose services are classified under MCC are required to pay certain fees to the credit card processor.

How Merchant Category Codes Can Boost Credit Card Rewards

The knowledge of MCCs offers many benefits to credit card users. MCCs are four digits codes that consumers can master, for instance, the MCCs for companies that offer the services below are; Landscaping (0780), Veterinary Services (0742), and Agricultural Co-operatives (0763). Sometimes, credit card companies offer rewards to consumers when they use their credit cards for croissant services. If a consumer is unaware of which service has which MCC code, such a consumer can miss out on the reward. Credit card users can check the categories of services and transactions in their credit card statements under the 'category' section.

merchant category code

Was this article helpful?

Yes
No

Related Articles

  • Waterfall Payment Scheme - Explained
  • Regulation CC - Explained
  • Open End Credit - Explained
  • Clearing House Interbank Payments System (CHIPS) - Explained



©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand