Getting your payment setup right goes far beyond which card networks or digital wallets you accept. One detail that's often overlooked—but critical to your financial operations—is your Merchant Category Code (MCC).
If you've ever asked, what is an MCC, how is it assigned, or why does it matter for my fees or compliance?, you're not alone. Let's walk through the basics and explore how merchant category codes affect your bottom line, region by region.
A Merchant Category Code (MCC) is the four-digit number used by the big payment networks like Visa, Mastercard, and American Express to categorise your business based on what you sell. It's their way of saying: "This business is a restaurant," or "This one sells electronics."
In the simplest terms you can think of your MCC as a shortcut for banks and processors to group businesses. For example:
Your MCC classification impacts everything from how fees are applied, to which transactions get flagged for review. It also helps route payments correctly and ensures you're staying in line with regional regulations.
Not all MCCs are treated equally. Some categories—like airlines or online gambling—may be seen as higher risk and come with steeper interchange fees. Others, such as education or groceries, may qualify for reduced rates under certain regulations.
Knowing your MCC can help you understand why your costs are what they are—and whether you're paying more than you should. If your code doesn't reflect your actual business activity, you might be leaving money on the table.
Card networks and payment providers use your MCC to determine how risky your business might be. A subscription service that charges recurring payments (MCC 5968) is evaluated differently than a one-time e-commerce purchase.
High-risk MCCs may trigger additional fraud checks or even limits on transaction volume. If your business model changes—say you move into new verticals or geographies—your MCC might need to change too.
Credit card rewards are often tied to MCCs. A customer might earn extra points for spending in certain categories—like dining or travel—but not others. That makes your MCC part of how customers perceive your brand and value proposition.
Some industries carry compliance obligations. MCCs help financial institutions identify transactions that may fall under stricter scrutiny. For example, certain codes are flagged under anti-money laundering (AML) or consumer protection rules.
In the US, MCCs directly affect how much you pay in interchange fees. Laws like the Durbin Amendment influence fee caps for certain merchant types—especially in sectors like fuel or groceries.
Digital wallets and credit card programs use MCCs here to calculate rewards, block restricted categories (like adult content or gambling), or enforce corporate spending policies.
In Asia's fast-moving digital payments space, MCCs help streamline approval rates across systems like UPI in India, AliPay in China, or GrabPay in Singapore. Many local wallets rely on accurate MCC data to ensure payment routing and compliance with local rules—especially when it comes to settlement and tax reporting.
The European Union's regulatory environment—GDPR, PSD2, and local equivalents—makes it crucial that MCCs are accurate. Some MCCs determine whether transactions fall under Strong Customer Authentication (SCA) or how cross-border payments are treated from a fee and reporting standpoint.
For businesses operating across multiple EU countries, the right MCC can mean smoother audits and lower processing fees.
To determine your current MCC, start by reviewing your merchant account or payment processor dashboard. You'll almost certainly find it there. If not, you can also:
If your MCC doesn't match your core activity, request a reclassification. This might involve submitting documentation to your processor or acquiring bank, but can be very worthwhile if it means a lower risk category and so better fees.
A little attention to your MCC can have a big payoff. Here's how to manage it:
Understanding your merchant category code is more than a technical detail—it's a lever for smarter financial management. Whether you're scaling across borders or just refining your fee strategy, your MCC plays a role in costs, compliance, and customer experience.
If you are still unsure about your setup talk to the experts at Antom. We would be happy to review your current MCC and see how we can align it with your business goals. Let's talk.