A Brief Overview on Merchant Category Code

The Merchant Category Code (MCC) classifies a company’s category. Payment systems use merchant category codes to distinguish and categorize retailers and companies based on the services/goods that they sell.

For example, retail stores use one code, while booking sites will use another. The standard ISO 18245 defines the professional business code. These codes are often shared with acquirers to identify, register and limit payments.

They are also used to collect data about the consumer’s buying activity, tax details, and exchange PR. PoS machines usually detect these codes. However, not all machines will be able to understand all codes because codes are frequently added, deleted, or modified by devices.

Importance of Merchant Category Codes

  • There are many buyers in a company, so they look at their MCC to see what kind of sales banks can expect from them.
  • The big title companies (American Express and Visa, MasterCard, MasterCard, Discover) also use cardholder reporting to determine the exchange fees a customer pays.
  • These merchant codes allow enterprises to be eligible for exchange rates. This can often lead to lower transaction fees than standard credit card charges.
  • Remember that not all merchant codes are eligible for lower exchange rates. Some codes may qualify companies for industry-specific rates that are not significantly lower than normal rates.
  • However, it is important to properly categorize your company for both accounting so that you don’t miss out on potentially lower prices.

Why do you need MCC?

Merchant category codes provide valuable insight for credit card processors. The issuing bank will use the retailer category codes to assess which categories of stores, hotels, entertainment, etc, are being visited by their clients. These data are used to achieve the advertising objectives. This data may also be used in order to prevent theft.

Merchant category codes may be used by companies that do not have the usual collection of shops. This could raise a warning alarm at the issuing branch. Both the vendor and cardholder will be able to save significant time and money by utilizing this warning system alert.

Companies in certain situations use merchant category codes to prevent cardholders from making transactions. Companies that offer workers corporate credit cards can ask credit card providers for restrictions on travel and lodging. To keep prices low, companies may ask their employees to stop booking first-class flights.

Wrapping up

MCC codes are not something that many businessmen know. However, it is important to determine if your business has been properly categorized. The MCC code can affect the price you pay to receive payments. This can reduce penalties which can have a significant impact on your business.

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