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How Merchant Category Codes Affect Your Rates

One of the factors within a merchant’s control in determining their interchange rates is the merchant category code under which they are classified. A merchant category code (MCC) is a four-digit number assigned to a business by the acquiring bank or institution when the business begins accepting credit cards (specifically Visa or MasterCard) as a form of payment. MCCs were launched in 2004 as a way to streamline 1099 reporting for commercial cardholders, but have gained additional uses over the ensuing decade.

The biggest factor in understanding your merchant category code is the influence MCCs have to affect the interchange fees your business pays. Certain types of businesses, such as “5261 Nurseries, Lawn and Garden Supply Stores,” “5975 Hearing Aids Sales and Supplies” and “4225 Public Warehousing and Storage” will qualify for lower interchange categories than will “4511 Airlines, Air Carriers,” or “5962 Direct Marketing – Travel.”

While you may not be able to realize lower interchange rates by getting your acquiring bank to change your MCC categorization, you need to know your MCC code for two reasons: accurate IRS reporting of transactions throughout the year and to make sure you get a lower rate if you are entitled to one. The IRS maintains a list of merchant category codes at Your current processor should also be able to provide your MCC to you.

For more information on merchant category codes and how to lower your credit card processing rate, please contact Sales Sense Payments at 585-704-6453 today.

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