What is a Merchant Category Code (MCC)?

Merchant category codes (MCC) are four-digit numbers used by an issuer of a credit card to categorize the purchases that customers complete using a particular card. There are several meanings of merchant category codes. They also decide the incentives that customers earn for using their credit cards, and determine whether they need to report a business transaction. The codes also decide the amount of each purchase that a company has to pay to the credit card processor.

This code reflects the primary category in which the merchant does business and may be used:

• To predetermine the interchange fee paid by merchant to the card schemes, the riskier the lines of business the higher fees.
• By credit card companies wanting to offer cash back rewards or reward points, for spending in specific categories.
• By card networks to define rules and restrictions for card transactions (for example, Automated Fuel Dispensers (MCC 5542). have specific rules for authorization and clearing messages).