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Merchant Category Code

 

Merchant Category Code (MCC) is a four-digit code assigned to businesses and merchants by payment card networks, such as Visa and Mastercard, to classify the type of goods or services they offer. MCCs categorize merchants into specific industry segments, providing insights into their primary business activities. These codes assist payment processors and financial institutions in managing risk, setting interchange fees, and implementing targeted marketing strategies. For example, an MCC of 5812 may represent a restaurant, while 7379 may indicate a computer programming service.

MCCs are crucial for tracking transaction data, facilitating regulatory compliance, and ensuring accurate reporting within the payment ecosystem. Specifically, MCCs help payment networks identify transaction types and monitor for fraudulent or illegal activity. They also enable customized rewards programs based on cardholder purchase behaviors. From a regulatory perspective, MCCs help ensure merchants meet requirements around permitted business activities, data protection, consumer disclosures, etc.

Businesses should be aware of their assigned MCC to align with industry standards, influence transaction processing costs, and optimize their payment processing relationships. An inaccurate MCC can lead to higher fees or blocked transactions if miscategorized as high risk. Monitoring MCC designation also allows merchants to benefit from tailored incentives or preferential interchange rates from issuers and networks for key industries.

 

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