What You Need To Know About Merchant Category Codes!
Merchant Category Codes (MCCs) are four-digit codes used by credit card processors and banks to classify businesses that accept credit cards. This helps them determine the type of merchant, such as a restaurant, retailer or online store. It also helps them assess the amount of risk associated with each merchant. MCCs are important for businesses that accept credit card payments because each transaction is assessed differently based on the MCC.
For example, if a business accepts donations, their transactions may be charged a higher processing fee than those of a local retail store. This is because it’s more difficult to predict whether or not there will be fraudulent activity associated with the donation-based transactions. In cases like these, the credit card processor will assign a higher risk MCC to classify the business as such.
It’s important for businesses to understand their assigned MCC and be aware of any changes in the code over time. This can help ensure that their processing fee is fair and accurate. Additionally, some financial institutions may require additional information when accepting payments from certain categories of businesses. This can include items such as business licenses or other forms of identification to verify the merchant’s identity.
MCCs are also used by credit card issuers to determine the rewards associated with a cardholder’s purchase. For example, if a cardholder uses a certain credit card to purchase items from a restaurant, they may be eligible for rewards that differ from those offered when they use the same card to purchase items from a retail store. Knowing the MCC associated with your business can help you understand the types of rewards your customers are eligible for when using their cards at your establishment.
Understanding merchant category codes and how they impact your business is essential to running a successful operation. Having the right information can help you stay informed and make sure that your payment processing fees are fair and accurate. Knowing the types of rewards associated with your MCC can also help you attract more customers by offering them a better incentive for using their cards at your business. Understanding MCCs can help you ensure that your customers get the best experience possible when using their credit cards at your establishment.