Glossary

Merchant Category Code (MCC)

MCC is a code used to recognize the kind of business in which the trader is involved. Payment structures apply MCCs in order to categorize as well as to differentiate merchants along with businesses according to the services/goods they are offering. These codes are also adopted by issuers along with acquirers in order to classify, record and limit transactions as well. Furthermore, they are also applied for collecting data about the customer’s purchasing behavior, tax informing along with interchange PR. Commonly, such codes are identified by PS, nevertheless, not every system can acknowledge all codes. This happens because systems periodically increase, remove or alter the codes.     

Usually, it is a four-digit cipher recorded in ISO 18245 for financial services specializing in retail. The codes are given according to either to the merchant type or name. Every production has transaction conditions which differ as well as different possibilities of the potential fraud.

The codes are applied by issuing financial institutions to decide if they approve or decline the particular transaction. These numeric codes have the ability to influence traders processing rates. If the categorization is inappropriate, the merchant will have to pay higher processing charges.

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