A cashier taking a credit card from a customer for payment

Everything you never knew about MCC codes and how they impact your small business

Monday, February 14, 2022

Does your business take credit cards? If so, you already have a merchant category code (MCC). These codes are used to classify merchants and other businesses by the type of products or services they offer. They get pretty specific, categorizing everything from bicycle shops to timeshare rentals.

What may seem like a simple industry code is actually very significant to payment processing, tax reporting and risk assessment. We’ll answer some of business owners and consumers’ biggest questions about MCC codes, including:

  • What are MCC codes?

  • Why are they important for businesses and consumers?

  • How can I change my MCC code?

  • How do they affect payment processing for businesses?

What are MCC codes?

MCC codes are four-digit numbers that classify a business by the services it provides or products it sells. If a business has a variety of products or services, the MCC code is usually based on the product or service that makes up the bulk of the business’ sales. MCC codes became a requirement for businesses by the Internal Revenue Service (IRS) for tax reporting and accounting purposes in 2004.

Merchant category codes distill down specifically to the business type. MCCs 5600 to 5699 are for clothing stores, shoe stores are 5661 and wig and toupee stores are 5698, for example.

An illustration of different MCC codes as shelves in a retail store

Who determines merchant category codes?

The International Organization for Standardization (ISO) sets the codes and assigns the meanings. However, credit card processors now assign a business a MCC code when the business sets up a credit card payment system. The four major credit card networks – Visa, Mastercard, Discover and American Express – share hundreds of MCCs between them. MCC codes are generally standardized; if your business sells nothing but car tires, you’ll likely be listed under “automotive tire stores” across credit card processors. However, variations can exist from network to network.

A cashier taking a credit card from a customer as payment

Why is an MCC code important to a business?

Your business’ MCC code can affect many aspects of your business, including:

Tax reporting icon

Tax reporting
MCC codes determine what payments a business owner has to claim on a 1099-MISC form. The IRS requires that businesses report payments that have been made for services, but not the purchase of products. MCC codes help business credit card holders know which charges to report.

Convenience fees icon

Convenience fees
MCC codes affect whether a business can charge convenience fees on credit card payments.

Risk icon

Risk measurement
MCC codes can influence whether your business is considered “high risk.” Some credit card companies use MCC codes to assess risk, which can affect transaction and interchange fees and rates.

Payment icon

Payment acceptance
A business may need specific industry MCC codes to accept certain payment types, such as from a health savings account or EBT cards. For example, to accept payments from a health savings account card, a business must have an MCC code in healthcare, such as a hospital or primary care provider office.

Chargeback icon

Chargeback prevention
If a consumer spots a charge they don’t recognize on their credit card statement, their first reaction is likely going to be to dispute it. MCC codes can help remind customers who you are in the case they don’t recognize your business on their statement. For example, if your business name doesn’t ring a bell, but they see your “5309 – Duty Free Store” MCC code on their statement, they’re more likely to remember their purchase, preventing a chargeback. Learn more about chargebacks, how to avoid them and how to build a rebuttal case, if necessary.

How do MCC codes affect payment processing for businesses?

Your MCC code is a representation of your business, so it affects payment processing in many ways, especially if your code is considered high risk for chargebacks and fraud by a credit card company. Your MCC code affects:

  • Interchange rates: Credit card companies, such as Visa and Mastercard, use MCC codes to calculate interchange fees and rates. These are the wholesale prices paid by businesses to process each credit card transaction. The interchange rates vary by credit card company, and businesses will pay higher or lower rates based on their MCC codes. Additionally, your payment processor will add a markup fee for these rates.

  • Chargebacks: If your business has a higher risk MCC code, credit cards may not offer you the same chargeback protections as companies with MCC codes deemed less of a risk.

  • Convenience fees: Whether or not your business can charge a convenience fee on credit card transactions is dictated by your MCC code. Some credit card companies only allow convenience fees for certain government and educational MCC codes, such as 9311-tax payments and 9211-court costs including alimony and child support, among others. If you’re interested in charging convenience fees, you’ll want to work with your credit card processor to learn more.

  • Merchant services applications: Credit card processing companies choose which industry MCC codes they will accept. Acquiring banks – banks on the merchant end of a payment – have their own rules about which MCC codes they will and won’t accept. For example, if you have a MCC code of 5933-pawn shops, an acquiring bank or credit card processor could see credit card payments to this kind of business as a higher risk. Based on your MCC code alone, your application could be rejected immediately. That doesn’t mean every processor will reject you – there are many processors that accept a variety of high-risk merchants.

A customer looking at products on a shelf in a retail store

How do you find the MCC code for your business?

It’s not always easy to find your MCC code as a business owner, as they may not appear on your merchant statements. The easiest way for a business owner to find their MCC code is to contact their credit card processor directly and ask them to disclose the code assigned.

If you’re interested in MCC codes of particular card issuers, many of the credit card companies have merchant category code information on their websites.

Also, consumers and business owners alike can call the number on the back of their credit card or examine the credit card statement to see the MCC codes of purchases.

How do you get a new MCC code?

Most businesses won’t have issues with their MCC codes. If, though, you think your credit card company assigned you a code that doesn’t fit your business, contact them. They will likely need more information to investigate, so start compiling that as soon as it’s requested to get the change made as quickly as possible.

You also may want to consider requesting a different MCC code if:

  • You’ve begun offering new products or services since your code was issued. If your MCC code doesn’t accurately reflect what your business is currently selling, it’s worth the conversation.

  • You’re experiencing an unusual increase in declined transactions that customers can’t explain. In this case, you’ll want to contact your payment services company to understand if your MCC is listed correctly.

Being informed about MCC codes allows you to be prepared.

If you already know that your business is likely considered a risk, consider making changes such as restructuring your sales or emphasizing a different line of business to potentially be seen as less risky by credit card processors.

An illustration of a smartphone as a physical store

Why do MCC codes matter to consumers?

Consumers often choose credit cards for rewards programs based on specific spending categories. Think of all the travel, dining and cashback rewards credit cards that exist among issuers. If a consumer is looking to maximize their points, miles or cash back, they will want to shop at businesses with the MCC codes that their credit card program incentivizes.

Consumers will want to make sure they understand the terms, conditions and exclusions of their credit card’s rewards program. Some credit cards may exclude certain stores or purchases, even if the MCC code is correct for the rewards program. For example: Your card program rewards travel purchases, so you purchase a travel package through a wholesale club store. If the fine print of the card says purchases from wholesale clubs are not eligible for the bonus program miles, you’ll lose out on the benefit. Additionally, the definitions of spending categories can vary. One credit card issuer could include car rental and tolls for their miles program, but another one may not.

Businesses also can have different MCC codes between locations and even in-store counters. For example, one location of a big box retailer can be classified with a grocery store MCC code, while another location may be classified as a discount store. Similarly, a pharmacy inside of a supermarket could be classified as health and medical services and supplies and not along with the supermarket/grocery store code. So, if your card rewards purchases at groceries, picking up your prescriptions at your local grocery may not yield the rewards you think it will.

An illustration of a clothing store

Merchant category codes by industry

MCCs 0001–1499:
Agricultural Services
MCCs 1500–2999:
Contracted Services
MCCs 4000–4799:
Transportation Services
MCCs 4800–4999:
Utility Services
MCCs 5000–5599:
Retail Outlet Services
MCCs 5600–5699:
Clothing Stores
MCCs 5700–7299:
Miscellaneous Stores
MCCs 7300–7999:
Business Services
MCCs 8000–8999:
Professional Services and Membership Organizations
MCCs 9000–9999:
Government Services
An illustration of a person using a giant smartphone to visualize wearing different outfits

Online store MCC codes

There is no single MCC code for ecommerce or online retailers. Credit cards often companies will typically use an MCC code that represents the retail outlet service code that best describes the online retailer’s sales.

Code 5937
Antique Reproductions
Code 5932
Antique Shops, Sales, Repairs, and Restoration
Code 5971
Art Dealers and Art Galleries
Code 5980
Art Supply and Crafts
Code 5940
Bicycle Shops
Code 5942
Code 5946
Camera and Photography
Code 5441
Children’s and Infant’s Clothing
Code 5734
Computer Software
Code 5977
Code 5311
Department Stores
Code 5714
Draperies, Window Coverings, and Upholstery
Code 5997
Electric Razors
Code 5732
Code 5651
Family Clothing
Code 5992
Code 5712
Furniture and Home Furnishings
Code 5947
Gifts, Cards, Novelties, and Souvenirs
Code 4251
Hardware Stores
Code 5945
Hobbies, Toys, and Games
Code 5722
Household Appliances
Code 5844
Jewelry, Watches, Clocks, and Silverware
Code 5948
Luggage and Leather Goods
Code 5611
Men’s and Boy’s Clothing
Code 5691
Men’s and Women’s Clothing
Code 5999
Misc. and Specialty Retailers
Code 5699
Misc. Apparel and Accessories
Code 5399
Misc. Merchandise
Code 5733
Musical Instruments
Code 5995
Pet Supplies and Pet Food
Code 5661
Code 5941
Sporting Goods
Code 5943
Stationery and Office Supplies
Illustration of a man pulling the needle of a risk meter towards the low value

Which MCC codes are considered high risk?

The following is a list of high-risk MCCs that require credit card association high-risk registration as well as other business categories that are also commonly difficult to establish.

MCC 3###
Specific airlines, air carriers
MCC 4112
Passenger railways
MCC 4121
Taxis and limousines
MCC 4131
Bus lines
MCC 4411
Cruise lines
MCC 4511
Airlines not elsewhere classified
MCC 4722
Travel agencies & tour operators, charters, tours & travel packages
MCC 4812
Telecom equipment & sales, telephone & cable services
MCC 4814
Telecom services
MCC 4816
Computer network services, internet access, cyberlocker, file sharing and cloud storage
MCC 4829
Money transfer, wire transfers
MCC 5094
Precious stones and metals, watches and jewelry
MCC 5122
Drugs, proprietaries & sundries
MCC 5592
Motor home dealers
MCC 5712
Furniture stores
MCC 5912
Drug stores and pharmacies
MCC 5933
Pawn shops
MCC 5960
Direct marketing, insurance
MCC 5962
Direct marketing, travel, including discount travel clubs
MCC 5963
Door-to-door sales
MCC 5964
Direct marketing, catalog merchant, mail order, telephone orders
MCC 5965
Direct marketing, combination catalog & retail merchant
MCC 5966
Direct marketing, outbound telemarketing
MCC 5967
Direct marketing, inbound teleservices, audiotext & videotext
MCC 5968
Direct marketing, subscription, continuity / subscription merchants
MCC 5969
Direct marketing, other, not elsewhere classified
MCC 5972
Stamp & coin stores
MCC 5993
Tobacco, cigarettes, cigar stores, vape e-cigs, e-cigarettes
MCC 5999
Miscellaneous specialty retail, includes ammunition and firearms
MCC 6051
Quasi-cash, currency, money orders, travelers cheques, debt repayment, loan payment, lease payment, mortgage companies (not money transfer, non-financial institution)
MCC 6211
Securities dealers
MCC 6540
Account funding, stored value card purchase, prepaid load (non-financial institution)
MCC 7012
Timeshares, timeshare rentals, leases and sales
MCC 7273
Dating services, misc. personal services
MCC 7277
Debt, marriage, personal counseling services
MCC 7361
Employment agencies
MCC 7519
Motor home rentals
MCC 7841
Video tape rental stores
MCC 7922
Ticket agencies, theatrical producers
MCC 7993
Video amusement game supplies
MCC 7994
Video games and arcades
MCC 7997
Membership clubs, health clubs, country clubs, sports clubs, private golf courses, boating clubs, swimming clubs
MCC 9223
Bail and bond payments
MCC 9399
Government services
A retail worker standing behind a desk with a POS

As a merchant, you have rights

While you may not have much control over your MCC code as a business owner, you do have control when selecting your payment processor. Heartland is the only payment processor to provide a Merchant Bill of Rights promoting fair credit, debit and prepaid card processing practices. We help small businesses securely accept payments wherever customers are: at the counter, table, kiosk, food truck, your website or the customer’s home. From EMV to Automated Clearing House, and from digital wallets to gift cards, we offer secure convenience to our customers.

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.