What you Need to Know About Merchant Category Codes (MCCs)

Whether you have a high-risk merchant account or a more traditional merchant account, you’ll be assigned what’s called a merchant category code (MCC). These codes are generally based on your business’ primary revenue source. This rarely becomes an issue, but it can cause some confusion as some businesses can fall between categories, or tagged as high risk, depending on the products they sell.

At E-Commerce 4IM, we specialize in providing high-risk merchant services. This includes chargeback mitigation, high-risk gateway setups, and the crucial aspects of accepting credit card payments online: high-risk friendly credit card processing. This makes us tailor-made for a lot of high-risk business types when it comes to making sure you can process credit cards in a stable and successful way that helps grow your business. The big question we’re looking into today is Merchant Category Codes, and whether they can positively or negatively impact your business.

Can you use MCCs to reduce chargebacks?

By and large, there are much more effective ways to reduce chargebacks than looking to changes to your MCC. However, some businesses in high-risk industries can benefit from reviewing their merchant code and decline codes with their merchant account provider, or by reaching out to us for a discussion.

Merchant category codes become an issue when someone is trying to purchase your products with a company credit card and the card is declined. Depending on the company’s expense policy, the merchant category code can actually determine whether the credit card gets rejected or accepted. If you’re in a particular industry, for example the hotel industry, your merchant account might give you a different code than what you first thought. You’d think you’d get a basic hotel MCC, right? Unfortunately, it’s not that easy.

Hotels need to be distinguished from one another, and there are times when issuing banks and credit card networks classify a specific hotel in a certain category. This can be as motels, timeshares, or even real estate short term rental brokers. The latter two are in the high-risk end of the merchant account spectrum.

To make matters worse, you might have a bar or a small store operating under the same roof. This makes payment processing a little more complex. While your main revenues might still come from guests booking rooms, you also have huge chunks of your business coming from other sources.

This is where you might benefit from establishing more than one merchant account in order to obtain specific MCCs for your various income sources. That way, each point of sale can be more easily distinguished, managed, and monitored on your end.

If you need help with your credit card processing and setting up multiple merchant accounts we can help. Simply contact us here and we’ll get back to you as soon as possible.

Credit card decline codes and card issuers

If you’re experiencing a relatively high number of rejected credit card payments for your business, it’s worth asking your acquiring bank or merchant service provider to analyze the credit card error codes. This can give you, as the business owner, invaluable insight into what’s hindering or slowing down your growth and sales. To get a more complete view, you can check out this merchant category code list from the IRS. However, you should know that the credit card networks (Visa, Mastercard, etc) will have their own lists of MCCs. Which means it’s worth some further investigation.

However, the fact of the matter is that it’s rare for your MCC to cause you trouble. The main reason a credit or debit card rejects a purchase based on merchant category codes is when the card is a business-issued, or a health savings card. When it’s a personal card, it’s very unlikely to cause any problems in terms of processing credit card payments.

Should you still experience strange credit card error codes, or chargebacks, you can always have your credit card processing service provider look into the matter. Chargebacks, in particular, can cause some issues for high-risk merchants. It’s important that you take the necessary chargeback mitigation steps. You can check our article on chargeback protection for more information.

Get the credit card processing services you need

At E-Commerce 4IM, we specialize in providing payment services that fully cater to high-risk businesses like yours. This means that if you sell high volume, high risk, products we’re here to help. This also means that we can help you reduce chargebacks as well as optimizing your overall credit card processing. In other words, don’t hesitate to reach out to us if you’re having issues with accepting credit card payments. We can help regardless of what credit card error codes you’re getting. We’ve got plenty of experience in the industry and we’re ready to help your business.