What You Need to Know About Merchant Category Codes (MCC)

Whether you’re new to the world of Miles & Points or a battle-hardened veteran who compares the relative vintages of first-class cabin champagnes, you probably love category multipliers. Category multipliers provide a bonus earning rate on specific types of merchants and purchases, such as groceries or gas, used to incentivize you to keep the credit card by rewarding you for spending big in those specific areas.

But who chooses which merchants qualify for certain categories of spend? Why don’t some bakeries code as a dining establishment on certain credit cards? How do you avoid the extra fees and charges that apply to purchases that might code as a dreaded cash advance?

Today, we answer all these questions by going behind the scenes and looking at merchant category codes (MCCs), which are the numbers payment networks use to determine whether your card might be eligible for earning bonus miles and points on purchases at a given retailer or not.

What Are Merchant Category Codes (MCCs)?

To make a long story short, merchant category codes are specific 4-digit numerical codes assigned to businesses taking credit card payments to categorize the type of business being done.

The codes themselves are set by international standards and shared by Visa, Mastercard, American Express, and (for our American friends), Discover. The networks themselves may slightly vary in which merchants get what coding on their own networks, but it is usually pretty consistent.

Payment networks are very specific in that they want all businesses categorized specifically, with a very clear idea of what types of services or goods are being provided. To give an example of how detail-oriented they can be, consider that the networks have a different code for zoos or aquariums (MCC 7998) versus amusement parks (MCC 7996).

There are a huge number of codes for every imaginable type of business, but a good rule of thumb is: if you can buy a legal product or service, it definitely has a merchant category code. The reason for this is that not all businesses carry the same level of risk.

For example, almost every major airline in the world has a unique merchant category code. This is because each airline as a whole has a chance at any time of needing banks to refund customers if they default and cease operations. On the other hand, some airlines are riskier than others and will be treated accordingly.

This same logic also applies to almost every other element of the travel industry: major hoteliers have merchant category codes running through 3501 to 3900, coming above car rentals between 3351 and 3500, and airlines taking up all codes between 3000 and 3350.

Why Are Merchant Category Codes Important?

Now, the reason why merchant category codes are important can be summarized from two perspectives.

The first one is the consumer perspective, which is something we are very big on here at Frugal Flyer, as we are all about maximizing rewards from your daily spending. If you’re going to spend money on any purchases, why not use those purchases to benefit yourself so you can travel more and pay less as a result?

From the consumer angle, merchant category codes affect consumers by determining what rewards earning rate a credit card might assign to purchases. For example, a product like the Scotiabank Gold American Express card, which earns 5 Scene+ points per dollar spent on all eats and drinks, is supposed to earn 5x on restaurants and dining, such as those institutions with code 5812 (restaurants).

It, therefore, should also code as 5 Scene+ points per dollar spent on delicious healthy fast food restaurants (MCC 5814), as well. Similarly, the 5 Scene+ points per dollar spent on the entertainment category probably applies to a variety of merchant category codes in the 7900s range, such as MCC 7941 (Commercial Sports).

The next reason that merchant category codes are important is that the networks and credit card issuers both want to make sure all businesses are coded correctly. We already spoke about the element of risk, with certain merchants needing to be identified so that proper risk analysis and compliance can be done by the networks to make sure that the companies are reputable enough to receive credit card payments.

On the other hand, the networks want to avoid miscoding. The type of business being done is viewed very seriously, and both networks like Visa and Mastercard, and some card issuers, are unwilling to allow cash or cash-like transactions to be recorded as anything other than specific merchant category codes such as MCC 7995 (gambling) or MCC 9406 (government-owned lottery).

This is because cash advance transactions take the place of real money. It’s very important for legal reasons that these be coded properly against illicit uses such as money laundering, as well as ensuring the card issuers are able to charge cardholders appropriately for effectively using cash advances.

What Are Some of the Most Important Merchant Category Codes in Miles & Points?

I’ve taken the liberty of making a list of merchant category codes that I view as being some of the most important.

Please note this is not an exhaustive list, but it does seem to cover some of the most common daily spend categories that credit card issuers, such as Canadian banks, try and incentivize customers to spend in. These also tend to be the most common areas for people to spend in, so reward yourself!

I’ve already talked about the specific merchant category codes for airlines, car rentals, and hotels, but here’s the others that fit into dining, groceries, gas, drug stores, and other forms of travel and daily transit, as well as streaming services like Netflix (which uses the same code as traditional cable):

With the above, I wanted to point out that this is where we get into the nitty-gritty details. For example, a card with an elevated earn rate may earn extra points at a fast food restaurant under MCC 5814, but not code at a fast-service bakery coded under MCC 5462.

This is also why almost no credit cards earn grocery bonuses at Costco: while most folks do grocery shopping there, the business also sells tires, electronics, and pretty much everything else. Therefore, it is coded as MCC 5300 (Wholesale Club). A credit card issuer would have to manually activate an elevated earn rate for this code as an incentive, which most won’t do.

Lastly, remember that a merchant category code doesn’t determine what type of good you’re buying. In the United States, retailers and credit card issuers have access to Level 3 data, which means they can see the types of goods you’re buying, so they may not issue a grocery store bonus if they can identify that you are purchasing gift cards there (though in Canada, you can still do this).

How Can I Check What Merchant Category Code a Vendor Uses?

There are a few ways to try and determine the merchant category code of a specific vendor. First up, you can review the Visa, Mastercard, and American Express merchant category code quick reference guides at any point in time and think about which one might best fit the place you’re buying items at.

Of course, this is just guesswork: if you want to find out the merchant category code, you may need to call your bank and see which one appeared on your credit card statement. This doesn’t help you if you’re trying to see if you’ll receive that bonus points multiplier first, though.

Fortunately, Awardwallet’s Merchant Category Lookup Tool contains almost every major vendor in North America that accepts credit card payments, so feel free to type in the name of a merchant before making a purchase if you don’t want to find out after the fact.

Conclusion

Merchant category codes are a hidden but vital part of the world of Miles & Points. They determine where you can earn the best rewards by categorizing what types of business are being performed at which merchants. 

They also allow the payment networks and credit card issuers to make sure that you’re receiving the proper goods and services you’re using their products to pay for, and to make sure they’re aligned with local laws and regulations.

We hope that you’ve found this article helpful and maybe an explanation for why a gas station’s snacks don’t code as groceries. Until next time, keep on racking up sweet rewards with your daily spends!