If you are like 99.9% of businesses who take credit card transactions, you probably don’t do any sort of calculations or deep analysis of your merchant processing statement each month. Even if you are one of the 0.01% of business who are critical of each and every fee, you may never of heard of an MCC code or have any idea what it is.
MCC stands for Merchant Classification Code and it is the mechanism that the card brands (Visa, MasterCard, Discover, AMEX) use to identify what your business offers their card holders. It is also what the credit card processing industry uses to organize which credit card rates you are charged for transactions depending on whether there are special rates set up for your industry.
So what are some examples of MCC codes that might provide you with better credit card processing rates? Here is a few examples:
- The Small Ticket program is the broadest program and most businesses are eligible for it. It provides a lower per item fee on transactions under $15.
- Restaurants (MCC 05812 or 05814) and Supermarkets (MCC 05411) can qualify for lower per item rates
- Gas Stations (MCC 05542) can qualify for lower rates for transactions completed at the pump
- Hotels and Motels (MCC 07011) and Car Rental Companies (MCC 07512, 07513, 07519) may be able to qualify at lower swiped rates for keyed transactions as well as being able to consolidate multiple authorized transactions for the same customer into one settled transaction.
Businesses should be aware that if your merchant solution provides you with 3 or 4 rate “categories” that you are charged, the savings that these programs provide might not be flowing to you. This is because these programs affect the wholesale rate that the processor is charged. If you are not on an interchange plus or “pass through” program, your processor may be recieving the cost savings without it being passed along to you.
Merchant Classification Codes (MCC) are also used by the card issuers for other security related purposes. A few examples are:
- The ability to limit the types of businesses where a card can be used
- This is how card issuers limit the use of Healtcare FSA and HSA cards to medical providers, pharmacies, and similar businesses.
- This function is also helpful for companies who want to ensure that their corporate purchasing cards are only used at business appropriate to their industry or the specific job function of employees.
- The ability to analyze when a transaction is outside of the cardholders normal spending pattern which may proactively indicate that the card has been stolen or the transaction is fraudulent.
MCC Codes aren’t something that you may have ever been aware of, but they help the credit card industry keep itself organized, keep card holders safe from fraud, and may even reduce your overall processing costs.
If you think that you might qualify for one of the programs mentioned above, call your merchant processor and ask them about it.
As always, we hope that this article has been helpful and informative. If you have any questions that we can answer or have a question of your own, please don’t hesitate to email me directly at ben.wallace@thepaymentpedia.com
Thank you,
Ben Wallace
Posted by Ben Wallace 
