What is MCC Code and How to Find Your Business's One?

Quick Answer

A Merchant Category Code (MCC) is the four-digit number card schemes (Visa, Mastercard) assign to classify what your business sells. It sets your interchange pricing, flags your risk level, and shapes which acquirers will underwrite you — so the wrong MCC can mean higher fees, compliance problems, or a terminated account. You can't self-assign it: your acquirer or payment processor sets it during underwriting, based on your primary line of business. Below: the codes that matter for high-risk verticals, how to find yours, and how to avoid miscoding.

What is an MCC Code?

An MCC code or Merchant Category Code is a four-digit number assigned to a business by credit card companies to classify the type of goods or services it offers. This helps to determine the nature of businesses for payment processing, risk assessment, and compliance purposes. These MCC codes are used globally to classify businesses on a unified basis with financial systems and institutions. 

MCC codes are established and controlled by major credit card schemes such as Visa, MasterCard, American Express, and Discover. These bodies have a standard list of MCC codes to be utilized across the world. They might slightly differ between what one network uses in its code and the other network, but again they always follow the same generic patterns.

Importance of MCC Codes for Online Businesses

Whenever a business wants to open a merchant account, understanding and correctly identifying their MCC code is crucial for optimizing costs, managing risks, and ensuring regulatory compliance. Here's a closer look at the importance of MCC codes for online businesses.

Transaction Fees

MCC codes also have a very pivotal role in the determination of transaction fees; thus, a business under the high-risk categories is expected to pay a little more due to the increased rate of fraud and chargeback. Knowing your code allows you to anticipate and manage these effectively.

Interchange Rates

Credit card issuers will group merchants by the merchant category codes to know interchange rates, or the rates they are charging for every business in each credit and debit card transaction. Interchange rate can vary considerably based on many factors:

• Risk: Businesses classified as high-risk, such as those in the gambling industry, incur higher interchange fees compared to low-risk businesses like bakeries. This is due to the increased likelihood of fraud and chargebacks associated with high-risk categories.
• Transaction Volume: The number of transactions processed also influences interchange rates. For example, retail stores with a high volume of transactions generally benefit from lower fees than industries like airlines, which have fewer but higher-value transactions.

It's essential for business owners to verify their assigned MCC to ensure they are paying the correct interchange fee. An incorrect MCC can lead to unnecessarily high fees and compliance issues.

Chargeback Ratios

Chargebacks are also heavily dependent on your MCC code. High-risk businesses have a higher likelihood of chargebacks, which can escalate into more fees and penalties by payment processors. Such businesses must, therefore, have very robust fraud prevention mechanisms and might need the help of external chargeback management companies.

Payment Processor Relationships

Your relationship with payment processors can also be shaped by your MCC code. High-risk businesses might find it more challenging to secure and maintain merchant accounts, often facing stricter scrutiny. On the other hand, low-risk 

businesses typically enjoy more favorable terms and easier account management.

Compliance Requirements

Compliance is another critical area affected by MCC codes. Different industries have specific regulatory requirements, and MCC codes help ensure businesses meet these standards. For example, they can aid in adhering to PCI DSS for payment card security or legal requirements for online gambling.

Low Risk vs High Risk MCC Codes

Low Risk MCC Codes

Low risk MCC codes are assigned to businesses that are considered less likely to experience fraudulent transactions or chargebacks. These businesses typically have stable and predictable transaction patterns. Examples of low risk MCC codes include:

• Family Clothing Stores (retail/stores) (5651)
• Shoe Stores (retail/stores) (5661)
• Computer Programming, Data Processing, and Integrated Systems Design Services (software services) (7372)
• Pet Shops, Pet Foods and Supplies Stores (5995)

High Risk MCC Codes

High risk merchant account  MCC codes are assigned to businesses that are more likely to experience fraud or chargebacks. These businesses often operate in industries with volatile transaction patterns or higher instances of customer disputes. High risk MCC codes can lead to higher processing fees and more stringent oversight. Visa classifies the following card-absent environment merchant MCCs as High-Integrity Risk merchants:

• Direct Marketing – Outbound Telemarketing Merchants (5966)
• Dating and Escort Services (7273)
• Digital Goods – Games (5816) for transactions involving skilled game wagering (e.g., daily fantasy sports)
• Betting, including Lottery Tickets, Casino Gaming Chips, Off-Track Betting, Wagers at Race Tracks and games of chance to win prizes of monetary value (7995)
• Non-Financial Institutions – ForeignCurrency, Non-Fiat Currency [for example: Cryptocurrency], Money Orders [NotMoney Transfer], Travelers Cheques, and Debt Repayment), for the sale of cryptocurrencies (6051)

How to Find Your Business's MCC Code

Contact Your Payment Processor

You can get your own MCC code specifically assigned to your business directly from the payment processor or merchant account provider. The payment processors directly have access to the classification system and can be sure that the categorization with respect to your business is correctly reflected.

Review Your Merchant Agreement

Your merchant agreement or contract with your payment processor may also list your MCC code. This document outlines the terms and conditions of your account, including the classification of your business. Reviewing this agreement can give you insight into how your business is categorized.

Online MCC Code Databases

There are several websites that list databases of MCC codes. These can help you identify your code by type of business. Of course, it is always best to verify your code with your payment processor to ensure its accuracy.

Multiple Items or Services

If the Merchant has more than one line of business and may qualify for more than one MCC, the Merchant must either: • Use the MCC that describes the business with the highest sales volume (measured in local currency) to process all Visa sales • Use different MCCs for each line of business.

MCC Miscoding: Risks and Consequences

As previously discussed in the How to Find Your Business's MCC Code section, it's essential to ensure your business is accurately classified with the right Merchant Category Code. However, incorrect MCC assignment—also known as MCC miscoding—can have significant consequences for your business, affecting multiple aspects of payment processing:

1. Higher Transaction Fees

If your business is incorrectly classified under a high-risk MCC code, you may end up paying higher transaction fees unnecessarily. This could also negatively impact your profitability, especially for small businesses where margins are tight.

2. Incorrect Interchange Rates

MCC miscoding can result in the incorrect calculation of interchange rates. These rates vary significantly by industry, with high-risk businesses facing higher rates compared to low-risk ones. An incorrect code might lead to paying more than necessary, impacting your overall financial efficiency.

3. Regulatory and Compliance Challenges

Different MCC codes come with distinct compliance requirements, such as PCI DSS for card payment security. Being misclassified might mean that your business is held to compliance standards that don’t apply, or worse, neglecting the correct ones, potentially leading to fines or regulatory issues.

4. Risk of Terminated Merchant Accounts

Payment processors assess the risk level of businesses largely based on their MCC code. Being misclassified under a higher-risk MCC could lead to heightened scrutiny and even termination of your merchant account if the payment processor considers your business a liability. Conversely, being coded as lower risk when in fact your business is high-risk could result in immediate account termination once discrepancies are identified.

5. Reputational Damage

MCC miscoding can also impact your relationship with financial institutions, including banks and payment processors. If these institutions believe that you’ve misrepresented your business type (even if unintentionally), it could affect your credibility and make it difficult to establish future partnerships.

Deliberate MCC Miscoding: An Illegal Practice

Some high-risk businesses might deliberately misclassify themselves by using a low-risk MCC code to gain unfair advantages such as lower transaction fees or to secure approvals that would otherwise be challenging. This practice is not only unethical but also illegal. Deliberate MCC miscoding is considered a form of fraud, and businesses found guilty of this can face severe penalties, including account termination, substantial fines, and potential legal action. Payment processors and credit card networks actively monitor for such practices, and the reputational damage from being caught can be long-lasting, making it nearly impossible to establish trust with financial institutions in the future.

How to Avoid MCC Miscoding

To avoid MCC miscoding, it’s important to:

• Verify with Your Payment Processor: Always cross-check your assigned MCC code with your payment processor to ensure its accuracy.
• Review Merchant Agreements: Regularly review your merchant agreements for any discrepancies regarding your business classification.
• Consult Experts if Needed: If your business operates across multiple sectors or has a complex structure, consult a payment processing expert to ensure the correct MCC classification is applied.

Correct MCC coding is crucial for avoiding unnecessary costs, ensuring compliance, and maintaining healthy relationships with your financial partners.

Common MCC Codes for Different Online Verticals

Below is a list of common MCC codes for various online verticals, as per the Visa Merchant Data Standards Manual, April 2024, helping you understand how your business might be classified.

MCC	Category	Typical vertical	Typical underwriting concern
7995	Betting, lottery, casino gaming, off-track betting	iGaming, betting, casino	Licensing, permitted geos, chargebacks, payout expectations
7273	Dating & escort services	Dating	Rebills, friendly fraud, consent/content controls
5967	Direct marketing – inbound telemarketing	Adult content, some subscriptions	Card-scheme sensitivity, refund clarity, billing descriptor
5966	Direct marketing – outbound telemarketing	Direct-response marketing	Complaint & chargeback exposure, marketing claims
5816	Digital goods – games	Games, skill wagering, fantasy sports	Skill-vs-chance classification, wagering rules
6211	Securities – brokers/dealers (HIR financial trading platforms)	Forex, CFDs, prop/trading	Regulatory positioning, affiliate traffic, geo concentration
6051	Non-financial institutions – foreign & non-fiat currency	Crypto sale, FX, money services	AML/source-of-funds, MiCA, volatility
5968	Direct marketing – continuity/subscription (negative option)	Subscriptions	Cancellation flow, negative-option billing, VAMP exposure
5499 / 5912 / 5122	Misc food / drug stores / pharma	Nutra, supplements, CBD	Product claims, jurisdiction, refunds - CBD often miscoded, high scrutiny (no dedicated CBD MCC)
5651	Family clothing stores	Retail (low-risk, for contrast)	Standard underwriting

An MCC identifies your category; it doesn't approve you. The acquirer's underwriting still decides - which is why the same MCC can be approved by one bank and declined by another.

How MCC Codes Impact Your Business

Understanding your MCC code can provide insights into various cost structures, risks, and compliance requirements. Here's how MCC codes impact your business:

Transaction Fees

MCC codes can significantly affect the transaction fees that businesses pay. High risk businesses typically incur higher fees due to the increased risk of fraud and chargebacks. Understanding your MCC code can help you anticipate and manage these costs.

Chargeback Ratios

The probability of chargeback strongly depends on the industry; high-risk MCC codes are likely to have a high rate of chargebacks, resulting in some additional fees and penalties from payment processors. Strong fraud prevention measures are hence to be put in place by the businesses.

Payment Processor Relationships

The relationship between a business and its payment processor can be influenced by the assigned MCC code. High risk businesses may face challenges in opening and maintaining merchant accounts. On the other hand, low risk businesses often enjoy more favorable terms and conditions.

Compliance Requirements

Different industries are subject to varying regulatory requirements. MCC codes help ensure that businesses adhere to industry-specific regulations, such as PCI DSS compliance for handling payment card information or legal requirements for online gambling.

Conclusion

Understanding your business's MCC code is crucial for effective payment processing and risk management. By knowing your MCC code, you can better navigate the complexities of transaction fees, compliance, and risk assessment. For accurate information, always consult with your payment processor.

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