Merchant Category Codes (MCC)

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.