The Importance of an MCC Code

Dec 28, 2018

Many businesses may not know, but an MCC code can you reduce chargebacks.

What is a MCC?

Credit card networks, such as Visa and MasterCard, assign A merchant category code (MCC), which is a four-digit number, to every business when it applies to accept credit cards. MCC codes are assigned based on the information about the products and services that you submit to your payment processor and merchant bank. Card networks use merchant category codes to categorize and track purchases and to define the rules and restrictions, such as authorization and clearing messages, for card transactions.

How to Find a Merchant Category Code

  • Merchant banks assign MCCs and the U.S. Internal Revenue Service publishes the list.
  • MasterCard, Visa, American Express, and Discover also create their own lists.

Why Merchants Should Care About MCCs

There is a direct correlation between the MCC and credit card processing rates you pay. Merchant service providers charge transaction rates and fees based on their business types.  For example, a higher risk business, like a such as a credit repair business, will cost more per transaction than a grocery store.

Merchant category codes also help business owners combat chargebacks. If a customer does not remember a charge, but then sees the category for “office supply store,” and remembers that charge was for upgrading business equipment. If a shopper is able to determine where the charge originated, the merchant can avoid a chargeback.

Other Uses for MCCs

In some cases, businesses use merchant category codes to prevent the cardholder from making some purchases. For example, businesses that give employees corporate credit cards may ask credit card networks to limit certain travel and lodging choices. Businesses may use this as way to keep costs down, by preventing its employees from booking first class airfare.

Additionally, merchant category codes often determine the rewards customers receive for using certain credit cards. The codes determine whether a business transaction needs to be reported to the IRS, as well.

Get Your MCC Changed

If you think your business has been given an inaccurate code, reach out to your processor. Then, ask the processor what code you were given from each card network. Once you find out, you will be able to determine the origin of the problem.

In Conclusion

Though many merchants likely do not understand MCC codes, it is important to find out whether your business is classified properly. An MCC code impacts the rates you pay to process payments and it can help prevent chargebacks, both of which can make or break your business.

Whether you are new to payment processing or looking for better rates with a new processor, then consider eMerchantBroker.com (EMB). EMB is a merchant service provider that not only works with high risk merchants, but it works with new and existing businesses, like merchants that have been rejected or terminated by other processors, as well as those with bad credit, no credit, or a history of excessive chargebacks. In addition to providing merchant accounts, EMB also offers merchant cash advances and other types of payment solutions.

Why wait any longer? Begin processing credit and debit card payments today. Fill out our online merchant account application to start the process.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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