What Are Merchant Category Codes (MCCs)?

Merchant category codes (MCCs) are four-digit numbers that credit card issuers use to classify individual purchases according the type of merchant where they were made. The codes serve a variety of purposes, including the calculation and issuance of credit card rewards.

Understanding Merchant Category Codes

Every transaction you make with a credit card 🀅is assigned a merchant category code base🙈d on the type of business involved.

Those MCCs can be used for a number of purposes. In addition to helping card issuers calculate the rewards that consumers are entitled to for their purchases, they can indicate whether a business needs to report a particular transaction to the IRS. In addition, they can affect the fees that the merchan✤t muﷺst pay to accept payment cards.

MCCs are based on International Organi🏅zation for Standardiz♑ation (ISO) codes and 澳洲幸运5官方开奖结果体彩网:Standard Industrial Classificatio♑n (SIC) codes for different types of businesses, but the card networks may adapt them for their own purposes. For example, Visa notes that, "In many cases, Visa has consolidated several SIC codes into one MCC to manage the number of MCCs. In other cases, such as for T&E and direct marketing merchants, Visa established MCCs that do not have corresponding SIC codes."

While many MCCs are recognized b🐲y all card issuers and processing networks, others can differ from one to another. Some merchants that offer a range of products and services may be assigned multiple MCCs. The codes are also subject to change over time.

Here are some common examples of how merchant categไory codes are used🐟.

• If a consumer has a credit card that offers 3% cash back on airline travel, they should receive that reward on any purchase that is classified under MCC 4511, a designation for airlines and air carriers.
• If a company purchases services from another company or from an individual who is not one of its regular employees, it must report that to the IRS and issue a 1099 form to the service provider if the payment exceeds a certain amount. Companies do not have to report the purchase of products in that manner. For purchases made with a credit card, the company can use the recipient's MCC to determine whether or not the transaction is reportable.
• The MCC assigned to a business can also dictate the 澳洲幸运5官方开奖结果体彩网:interchange fee it must pay to its card processor on transactions. For example, a business classified under the MCC for gas stations but happens to rent cars may pay higher or lower fees than one that's classified as a car rental company.

Examples of Merchant Category Codes

These are some of the MCCs related to travel and transportation used by Citibank.

How Consumers Can Use🔯 MCCs to Maximize Their Rewards

Individual🔴s with rewards cards can ဣearn greater rewards if they know their MCCs.

Suppose you have a credit card offering 3 points for every $1 in you spend at restaurants. The way the credit card company determines whether your transactions took place at a restaurant is by looking at the MCC. If you buy lunch at a small mom-and-pop establishment that combines a restaurant with a grocery store, and the MCC classifies the business as a grocery store, you won't earn 3 points per $1 on what you thought was a restaurant purchase but just whatever your card pays on grocery purchases (if anything).

However, if you visi🃏t this establishment frequently, you could use a different credit card, perhaps one that gives you 3% back on grocery store purchases, to maximize your cash back.

The same applies if you buy your groceries at a big-box sꩲtore like Walmart, which may or may not entitle you to the same rewards as a regular grocery store, depending on the M♛CC assigned to it.

In addition, if a credit card issuer fails to give you the correct amount of points or cash back despite an MCC that should have triggered the proper bonus, you can use thaꦫt information to ask that it rectify the error.

The Bottom Line

Whenever you use a credit or debit card to buy something, the card processor will assign the transaction a MCC number based on the type of merchant. While this generally takes place behind the scenes, it is worth knowing about if you have a card that pays rewaꦓrds, particularly one with different levels of rewards for different kinds of purchases.