Why Your Merchant Category Code (MCC) Matters

As a business owner, you’re familiar with the term “merchant” in the payments field. With 33.2 million businesses operating in America across various industries and specializations, identifying each by name and operation type would be time-consuming. This is where the Merchant Category Code (MCC) comes into play.

An MCC is a unique code that classifies businesses based on their industry and business type, used by banks, card brands, payment processors, and the IRS. Understanding your MCC and its impact on your operations, especially regarding high-risk payment processing, is crucial.

Understanding Merchant Category Codes

MCCs are four-digit numbers classifying businesses by industry and sub-industry. Created by the ISO (International Organization for Standardization), MCCs are used by entities like Visa, Mastercard, and the IRS for various purposes, including risk assessment, rewards calculation, and tax reporting. The correct MCC can influence your business’s risk identification, interchange rates, and fraud protection.

Assigning and Utilizing MCCs

The ISO established the MCC list, but entities like Visa and Mastercard have their own versions. MCCs help credit card processors assign a code during the merchant account application process, influencing the underwriting decision and associated risk level. It’s essential for merchants to know their MCC and ensure it accurately represents their business.

Implications of MCC on Your Business

Your MCC can significantly impact your business operations. It can dictate the interchange rates you pay, determine fraud and chargeback protection levels, and influence the acceptance of specific card types. For example, an incorrect MCC can lead to higher processing fees or restricted card acceptance. Therefore, ensuring the right MCC is assigned to your business is vital.

Ensuring the Correct MCC with a Trusted MSP

Working with an experienced and ethical Merchant Service Provider (MSP) like Bankcard International Group can help ensure your business is assigned the correct MCC. Our team specializes in high-risk payment processing, taking the time to understand your business model and needs, ensuring the most accurate MCC is applied. This can maximize your interchange fees and provide suitable solutions for your specific business requirements.

If you’re unsure about your MCC or looking for a dedicated processor that understands your needs, Bankcard International Group is here to assist. Contact us to ensure your business is accurately classified and set up for success.

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