Any business taking customer payments must focus on merchant category codes because your MCC can impact the interchange rate and the cost of card processing.
MCC also impact taxes and the way the Internal Revenue Service (IRS) categorizes your business.
The merchant category code is simply a 4-character number that credit card firms use to organize businesses into segments. The code shows the various products or services a brand sells to customers.
For companies that trades in both products and services, the category code often represents the business that rakes in the most sales.
Where to Get a Merchant Category Code
To get an MCC, contact your credit card processor, whether MasterCard, Visa or any other, to get the details about their category codes.
You can also visit your card brand’s official website. Many times, these codes vary depending on your processor, but some resemblances exist, as we shall see.
Merchant Category Codes for Visa
Below is a list of category codes for the various merchant segments.
|5611||Men’s and Boy’s Clothing and Accessories Stores|
|5621||Women’s Ready – to – Wear Stores|
|5631||Women’s Accessory and Specialty Shops|
|5641||Children’s and Infant’s Wear Stores|
|5651||Family Clothing Stores|
|5655||Sports Apparel, Riding Apparel Stores|
|5681||Furriers and Fur Shops|
|5691||Men’s and Women’s Clothing Stores|
|5697||Tailors, Seamstress, Mending, and Alterations|
|5698||Wig and Toupee Stores|
|5699||Miscellaneous Apparel and Accessory Shops|
|5712||Furniture, Home Furnishings, and Equipment Stores, Except Appliances|
|5713||Floor Covering Stores|
|5714||Drapery, Window Covering and Upholstery Stores|
|5718||Fireplace, Fireplace Screens, and Accessories Stores|
|5719||Miscellaneous Home Furnishing Specialty Stores|
Household Appliance Stores
|5733||Music Stores, Musical Instruments, Piano Sheet Music|
|5734||Computer Software Stores|
|5812||Eating places and Restaurants|
|5813||Drinking Places (Alcoholic Beverages), Bars, Taverns, Cocktail lounges, Nightclubs and Discotheques|
|5814||Fast Food Restaurants|
|5912||Drug Stores and Pharmacies|
Why Business Owners Must Pay Attention to MCC
MCC is important because it determines whether a merchant can report given payments on IRS’s Form 1099-MISC.
The code also determines whether or not a company can add a convenience fee on payments made via credit cards.
Category codes also have an impact on a business’s risk profile. For instance, some credit card firms have high-risk codes meant for risky businesses. Businesses with a high risk merchant account fall in these groups and pay higher processing fees.
Lastly, businesses with specific category codes like non-profits or certain schools are entitled to relatively lower interchange fees.
With too much at stake, business owners must strive to get the right classification. Accurate categorization will help you avoid extreme fees, ease tax payments and streamline your business’s payment experience.