Merchant Category Codes (MCCs)
MCCs assigned to a business by Visa or Master Card by using a four-digit number. It is used to classify the business by the type of goods or services it provides.
Merchant business is identified based on MCCs. Merchant category codes (MCCs) are used by payment brands to classify merchants and businesses by the type of goods or services provided. MCCs categories can be used by Payment brands, issuers, and acquirers, track, and restrict transactions.
An MCC reflects the primary category in which a merchant does business and may be used:
- to decide the interchange fee paid by the merchant, with the business involved in a high-risk category by paying higher fees
- by credit card companies (for example Citibank) to offer promotional rewards such as cashback or reward points
- by the card, networks to specify the rules and restrictions for each card transactions
High-Risk Merchant Category Codes
Rules and regulations were established by the credit card associations to define the use of particular MCCs including requirements to pre-approval merchants for specific high-risk MCC categories ‘ main purpose for high-risk monitoring. High-risk merchant category codes are those industries that mainly generate the highest levels of cardholder disputes, which represent the higher levels of financial risk to the banks.
Reference of MCC Codes:-
“Merchant Category Codes” (PDF). www.citibank.com. Citibank.