Merchant Category Codes (MCC)
Categories: Credit, Regulations
A “merchant category code,” or MCC, is a four-digit code attached to plastic-accepting businesses that operate within a given industry. For example, all wallpaper and paint stores that accept credit and/or debit cards are given the same MCC (5231, for the curious). But if we buy our paint at a hardware store, hardware stores’ MCC is 5251, so we might see our purchase show up as a 5251 instead of a 5231 on our credit card statement.
Why is this important, and why should we care? Well, there are a few reasons. As cardholders, we might have one of them nifty cash-back credit cards that gives us, say, 1.5% back on every paint purchase during the month of June. If we buy our paint at a 5231 merchant, we’re golden. But if we buy it at a 5251 merchant, we might not automatically get that sweet cash back, since the seller isn’t coded as a paint store, it’s coded as a hardware store. So there’s that. If it happens to us, we can always call our card company and see what can be done about it.
If we’re a business or business owner, we should be especially interested in MCCs, since they can often help the IRS determine what we can claim as business expenses and what we can’t. Also, if we’re a business that excepts credit or debit cards for our goods and services, we want to make sure we’ve got the right MCC code, because that can sometimes determine the transaction fees we owe to the actual card vendors.
Long story short (okay…long story kind of long), MCCs are super helpful in identifying, organizing, streamlining, and taxing credit-and-debit-card-related purchases. If we want to know what a specific organization or industry’s MCC is, the IRS has a published list online, along with plenty of print about how MCCs relate to taxes in general.
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Finance: What is a Merchant Account?4 Views
Finance allah shmoop What is a merchant account All right
You sell earrings at the mall hearings for years and
you know other regions private ones You're a merchant You
take credit cards visa amex mastercard A customer pays for
her ear ring with a visa card charge for three
hundred bucks Alright Well where does that money go How
does it get there Well because you pierce on earth
have a merchant account you take her little mag strip
thing Me on her card with all our information has
everything on it like her name bank number address phone
a whole bunch of other codes on it You swipe
it in your little reader and voila Three hundred boxes
taken from her account with visa taking about five bucks
of this transaction for the pleasure or pain of doing
it And then visa room it's two hundred ninety five
dollars into your bank of america merchant account that's How
you got paid So who gets a merchant account Do
you need a fundamental genetic resistance teo Kryptonite to be
granted such lofty status No not at all Generally speaking
all you need is a few grand in a basic
bank account Reasonable credit scores like above six hundred ish
And you have to be willing to fork over some
minimum initial amount as well as minimum monthly amount So
it's still worth it for the credit card companies and
banks to continue to be in business with you like
there's A basic monthly fee for most of them Well
how do you lose your merchant account status Well you
offer lousy product to your customers who demand their money
back through charge cards in what's called a charged back
like they dispute the charge and make the credit card
company go after you for the refund And that then
violates some minimum few percent floor from a credit card
taking perspective and well then visa mastercard amex will They
could just stop issuing you a credit taken stopped taking
customers cards from you and then you have to only
take cash You're screwed But as long as you follow
the rules pay your bills and continue to attract creative
people who want piercings in you know interesting places like
the mall Then you'll remain in business for a long
as you want more or less and well so that's
It You're one of the few the proud the merchants