The Best Merchant Category Code for Your Business

As our economy becomes more complex and new goods and services emerge, it’s often not cut and dry what merchant category code (MCC) is best for your business. Plus, many companies can potentially qualify for multiple MCC’s.

For example, a merchant sells SaaS on a monthly subscription basis and advertises for their product using paid ads online. The merchant could be categorized as 5968, Direct Marketing – Continuity/Subscription Merchant, which speaks to their billing method, or they could be categorized as 5734, Computer Software Stores, which speaks to the type of product they sell.  Which one is acceptable?  According to VISA /MasterCard, both are valid MCC’s for this merchant.

How Do You Find Out Your MCC?

You have to call your merchant bank and ask them. 

How Do You Know If It’s the Right One For Your Business?

This information is not publicly available. We can help you find this out. You can reach out to our sales team, and we’ll gladly provide data on your MCC’s average performance, as well as possible alternatives and their average approval rate and interchange fees.

How to Change Your MCC

Unfortunately, this is not easy.  As referenced above, your merchant category code is assigned to your account as part of the account setup before you process your first transactions.  Due to the significant liability of potential fines and suspension of a bank’s processing license for miscoding, most merchant banks outright refuse to change a merchant’s MCC after it’s assigned. 

If you process a high volume of transactions or are a very lucrative merchant to your bank, we have seen merchant category codes change, even if the bank categorically refuses as a matter of policy.   

The easiest way to obtain the ideal merchant category code is to suggest it to your merchant bank when opening a new account.  Tell your bank, “we’ve had great success being categorized under MCC xxxx and require that MCC for our account to process with you.”  Generally, this tactic works quite well. 

As a merchant, having the best MCC is a critical factor in protecting your profit margins.  It can be a complete game-changer for a business! On many occasions, an MCC switch can single-handedly make the difference between a merchant who struggles to eke out a profit and a profitable business that has the cash flow to invest in improving its product, providing better service, and generating significant returns for its shareholders. 

Read this article to learn more about the impact your MCC has on your business.

Contact FlexPay to see how we can help you today!