Merchant category code (MCC)

What is a merchant category code?

A merchant category code, or MCC, is a four-digit code used to classify a merchant by business type, industry, or activity. MCCs are assigned during merchant onboarding and are used by acquirers, card networks, issuers, PSPs, and payment processors to understand what kind of products or services the merchant provides.

In simple terms, an MCC tells the payment ecosystem what type of business a merchant is.

How merchant category codes work

When a merchant applies for payment processing, the acquirer or payment provider reviews the merchant's business model and assigns an MCC that matches its main activity. For example, different MCCs may apply to hotels, airlines, restaurants, digital goods, gambling, financial services, charities, or online retail. The selected code helps payment participants apply the right rules, fees, risk controls, and reporting treatment.

A merchant should usually have an MCC that reflects its actual business activity. If the code does not match what the merchant really sells, it can create underwriting, risk, compliance, or chargeback issues.

What MCCs are used for

Merchant category codes are used across many areas of payment processing, including:

• merchant onboarding and underwriting;
• card network rules;
• interchange and scheme fee treatment;
• risk assessment;
• fraud monitoring;
• chargeback analysis;
• transaction reporting;
• issuer decisioning;
• reward programs and cardholder benefits;
• restrictions on certain merchant types;
• tax or regulatory reporting in some markets.

Because MCCs influence how transactions are interpreted, they are important for both merchants and payment providers.

MCC and payment risk

MCCs help payment providers understand a merchant's risk profile. Some categories are treated as higher risk because they may have higher chargeback rates, stricter regulatory requirements, delayed fulfillment, refund complexity, or greater exposure to fraud. Examples can include travel, gambling, crypto, adult content, financial services, supplements, and other restricted or regulated sectors.

A higher-risk MCC does not automatically mean the merchant cannot be approved, but it may affect underwriting, pricing, rolling reserve requirements, settlement terms, monitoring, and provider availability.