What is an MCC Code?

Modified on Tue, 3 Sep at 10:49 PM

Visa, Mastercard, and Discover use a merchant category code (MCC) to classify various businesses that accept their cards. Each business is assigned a specific MCC code to help card associations regulate what types of cards are accepted, define interchange classifications, and determine how merchants can process transactions.

Allied Payments and our processing banks decide on MCC codes, but they must be confirmed by card associations for new accounts. While a merchant can request a specific MCC code, the final decision rests with our processing bank and the card associations. Allied Payments manages the proper setup on your behalf, so you don’t need to worry. However, MCC codes for certain merchant types are particularly crucial:

Non-Profits: Obtaining the correct MCC code as a non-profit can provide access to significantly lower interchange rates from Visa and Mastercard. Both card associations offer reduced rates to non-profits to help retain more funds within the charity. However, not all non-profits qualify for these discounted rates; you must be categorized as a “Charitable/Social Service Organization – Fundraising.” This means that even if federally recognized as non-profits, professional organizations might not qualify for the discounted rates.

Healthcare Providers: If you are a doctor, pharmacy, or another healthcare-related provider, you will likely accept HSA or Flex-spending cards as payment. To accept these cards, you must be classified as a healthcare-based organization. Patients cannot use their Health-Savings cards for your services without this classification.

Lodging/Rental Merchants: Businesses that need to authorize a transaction at the start of a booking, such as hotels or car rental agencies, and then charge the card later, must be appropriately set up for this process. Standard authorizations only last 24-48 hours, so we must ensure you have the correct MCC code if you need extended authorizations. This will prevent you from incurring higher interchange rates due to expired authorizations.