MCC Codes (Merchant Category Codes)

What Does MCC Stand For?

A Merchant Category Code is used by Visa/MasterCard/Discover to classify different businesses that accept their cards. By defining a specific MCC code for each business, the card associations are able to regulate what types of cards are accepted, what types of interchange classifications are granted, and how merchants are allowed to process.

MCC codes are determined by Dharma and our processing banks, and must be confirmed by the card associations for all new accounts. Fundamentally, a merchant may request a specific MCC code, but our processing bank and the card associations have the final say. Getting setup properly is something that Dharma handles on your behalf, so there’s no need to worry. But MCC codes for the following merchant types are of particular importance:

  • Non-Profits: Getting the right MCC code as a non-profit can give you access to much lower interchange rates from Visa/MC. Both card associations have reduced rates for non-profits in an effort to keep more money in the charity’s hands. Not all non-profits will be eligible for discounted interchange rates, though – you’ll need to be classified as a “Charitable/Social Service Organization – Fundraising”. This means that professional organizations (even if you’re a federally-recognized non-profit) may not necessarily receive access to discounted interchange rates. Click here to learn more.
  • Healthcare Providers: As a doctor, pharmacy, or other healthcare-related provider, you’ll likely receive HSA or Flex-spending cards as a manner of payment. In order to accept those cards, you must be classified as a healthcare based organization. Otherwise, your patients won’t be able to pay for your services with their Health-Savings cards.
  • Lodging/Rental Merchants: Merchants who need to “authorize” a transaction at the beginning of a booking (such as at a hotel or car-rental agency) and then charge that same card at a later date will need to be setup properly to do so. Standard authorizations only last for 24-48 hours – so if you require extended authorizations, we’ll need to ensure you have the proper MCC code to allow for that so that you don’t pay higher interchange rates for expired authorizations. Click here to learn more.

Retail (or card present merchants) may also wish to read about Terminal Applications, as these closely relate to your MCC!