The ultimate guide to merchant category codes (MCCs) and why they matter

Merchant category codes (MCCs) are more than just numbers assigned to your business—they shape how banks, payment processors, and card networks treat your transactions. Whether you run an online store, a subscription service, or a crypto exchange, your MCC can impact everything from processing fees to fraud risk and even whether your payments get approved at all.

In this guide, we break down what MCCs are, how they affect your business, and—most importantly—what you can do to ensure your MCC is working for you, not against you.

What are merchant category codes (MCCs)?

A merchant category code (MCC) is a four-digit number assigned to businesses by credit card networks (Visa, Mastercard, American Express, Discover) that classifies the type of products or services they sell.

Why MCC codes matter for merchants and banks

MCC codes are essential because:
✔ Banks use MCCs to assess transaction risk.
✔ Payment processors use MCCs to set processing fees.
✔ Visa and Mastercard track MCCs for chargeback monitoring and fraud prevention.

Example:

• A luxury watch retailer (MCC 5094 — Precious Stones & Jewelry) faces higher fraud risks than a grocery store (MCC 5411 — Supermarkets).
• A cryptocurrency exchange (MCC 6051 — Digital Currency Services) is subject to tighter compliance requirements than an online bookstore (MCC 5942 — Books & Media).
• A digital goods merchant (MCC 5815 — Digital Content) may face higher chargeback risk than a grocery store (MCC 5411 — Supermarkets), leading to stricter fraud monitoring and higher fees.

How MCC codes impact businesses

Chargeback risk by MCC code

Some MCCs have much higher chargeback rates than others. Merchants in high-risk MCC categories need strong chargeback prevention strategies to avoid penalties.

Chargeback rates by industry (estimated averages):

Why these industries get hit hardest:
✔ Subscription businesses suffer from auto-renewal disputes.
✔ Digital goods are easy to consume and dispute later.
✔ Luxury e-commerce attracts high-value chargeback fraud.
✔ Cross-border transactions create chargeback confusion.

Processing fees and payment restrictions

High-risk MCCs pay higher transaction fees due to:
✔ Increased fraud exposure (crypto, gambling, gaming).
✔ Higher refund and dispute rates (subscription services, travel).
✔ Strict regulatory compliance (forex, financial services).

Example:

• A forex trading platform (MCC 6211 — Securities Trading) pays higher fees due to regulatory concerns and fraud risks.
• A CBD business (MCC 5499 — Specialty Food Stores) faces extra compliance checks due to industry regulations.

Payment approvals and restrictions

Some payment processors refuse to work with certain MCCs due to high risk.

High-risk MCCs that face processing restrictions:

If a business has a high-risk MCC, they may need to:
✔ Work with high-risk payment processors.
✔ Implement strong fraud and chargeback prevention measures.

How to optimise your MCC code and reduce risk

If your business is wrongly classified under a high-risk MCC, you might be:

• Paying higher processing fees due to perceived risk.
• Experiencing more chargebacks because of stricter monitoring.
• Facing transaction limits or restrictions from payment processors.

How to optimize your MCC code for better payment processing terms

1. Check your current MCC classification

• Where to find it: Check your merchant account statement or ask your payment provider.
• Action: Compare it with the official MCC list to ensure correct classification.

Example: If you sell fashion accessories but your MCC is 5094 (Jewelry — High Risk) instead of 5699 (Apparel & Accessories — Medium Risk), you might be overpaying fees.

2. Request a reclassification if necessary

• When to request: If your business model does not match your MCC category.
• How to apply: Contact your payment provider and provide:
  • Business description (what you sell and how you process payments).
  • Supporting documents (invoices, product lists, website screenshots).
  • Alternative MCC codes that better fit your business.

Example: A digital marketing agency wrongly classified as “Direct Marketing — High Risk (5964)” can request to be reclassified as “Advertising Services (7311)” to lower fees.

3. Implement chargeback prevention strategies

If reclassification is not possible, focus on:
✔ Fraud prevention tools such as AI-based fraud filters and 3D Secure.
✔ Clear refund policies to avoid disputes.
✔ Chargeback alerts for early warnings.

Example: Subscription-based businesses (MCC 5968) should send pre-renewal reminders to reduce “I forgot to cancel” chargebacks.

4. Monitor your chargeback ratio

Visa and Mastercard closely monitor merchants with chargeback rates above 1%.

• Target: Keep chargebacks below 0.9% to avoid penalties or account termination.
• Use: Dispute management tools to fight chargebacks effectively.

Example: A cryptocurrency exchange (MCC 6051) that exceeds chargeback thresholds may be forced to use high-risk payment processors.

The importance of managing your MCC correctly

Choosing the right MCC is not just about compliance — it directly impacts:

• Processing fees: The wrong MCC can cost thousands in extra fees.
• Chargeback risk: High-risk MCCs face stricter monitoring and intervention.
• Payment approvals: Some MCCs face transaction limits or outright bans.

Key takeaways:
✔ Regularly check your MCC classification.
✔ Reclassify if necessary — a small change can lower fees and reduce risk.
✔ If stuck with a high-risk MCC, use fraud prevention and chargeback reduction tools.

Final tip: Work with a payment processor that understands your industry to ensure seamless payments and fewer restrictions.

MCC code trends and emerging high-risk categories

MCCs are not static — industries rise or fall in risk category as regulations change.

Industries becoming higher risk due to stricter compliance and monitoring

• Cryptocurrency & Financial Services (6051, 6211, 6012): AML rules and KYC verification tightening.
• AI-generated content & online services (5815, 5816, 7372): Rising fraud from deepfake content and fake accounts.
• Subscription services (5968, 7841): Increasing chargeback rates attracting scrutiny from Visa and Mastercard.

Industries facing reduced risk and greater payment acceptance

• Telehealth & online medical services (8099, 8011): More accepted post-virtual healthcare boom.
• Cannabis & CBD (5912, 5499, 5122): Growing payment provider support.
• Luxury goods (5094, 5699, 5944): Better fraud prevention lowering chargebacks.

Why this matters:

✔ Stay ahead of compliance changes.
✔ Anticipate payment processor restrictions.
✔ Plan strategically for reclassification.