Do you know what an MCC guide is? Let's take a closer look at one of the projects we are running.

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A Merchant Category Code (MCC) is a four-digit number used by payment networks to classify businesses based on the type of goods or services they provide. For example, a grocery store might have an MCC of 5411, while a hotel could be 7011. These codes are assigned when a merchant sets up their card payment processing, and they play a crucial role in the way transactions are handled behind the scenes. It is also very important that the correct codes are assigned to the correct businesses.

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Why? Interchange rates, for starters. MCCs influence the fees a merchant pays for accepting card payments. Certain MCCs, such as education or charities, may qualify for lower interchange rates. Then, there are consumer rewards and restrictions. MCCs are used to determine how consumers earn credit card rewards. For example, a card might give 3% cashback at restaurants, but only 1% elsewhere. They're also used to enforce spending restrictions. Blocking gambling transactions for certain users for instance.

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With regards to risk and compliance, MCCs help identify higher-risk businesses for fraud monitoring and Anti-Money Laundering (AML) purposes. They also support regulatory reporting and merchant monitoring. And in some jurisdictions, MCCs are tied to IRS rules (e.g., 1099-K reporting in the U.S.), which affects how payment processors report merchant income.And finally, MCCs determine card acceptance rules. Certain card products are restricted to specific MCCs. For example, corporate fuel cards may only work with gas station MCCs.

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The story becomes more complex for merchants who offer multiple types of products or services (e.g., a café that also sells retail goods). Because if the MCC isn't fully capturing their business model, or the wrong MCC is assigned, it can affect merchants' fees, customer rewards, or even the ability to process certain card types. Fixing an incorrect MCC often requires working with the acquiring bank or processor.

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In short, MCCs might seem like a small part of payment processing, but they quietly shape a huge amount of the experience for merchants, issuers, and consumers alike.

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They're a foundational part of how card payments work, affecting pricing, rewards, compliance, and even innovation in fintech. Our contribution to this story is that we are carefully updating the newest version of MCC lists for our customer. We cross-check ISO standards and operating regulations, and generate a clear description of MCCs. Taking into consideration regional differences, example use cases, specific restrictions, name formatting and so on.