Rewards cards that include bonus points for certain purchases can be especially exciting, but there is a little-known catch that might cause you to miss some points: the merchant category code (MCC). MCCs are used by card issuers to figure out how to categorize your spending—and, when applicable, to decide which reward categories your purchases fall into.
Find out more below about how MCCs work, why they matter, and how to make sure they don’t trip up your credit card rewards game plan.
- For consumers, MCCs matter most in terms of how credit card rewards are calculated. How a merchant is classified can affect whether a purchase is earmarked to earn bonus points.
- MCCs are based on the type of merchant, not the items purchased. In other words, it doesn’t matter what you are buying, but where you are buying it from.
- Although there are ways to look up a merchant’s MCC, a better use of your time may be to dig into your credit card agreements. That’s where you can usually find details on which purchases count (and which don’t) to earn a card’s bonus rewards.
What Is a Merchant Category Code (MCC)?
MCCs are four-digit numbers that credit card processors assign to businesses for credit card payments. The code is used to classify the merchant into a particular category based on the goods or services it sells most.
In rare cases, a merchant can set its own MCC, but for the most part, the payment processors have the final say.
When consumers pay with a credit card, the merchant category code is transmitted to the payment processor (Visa, Mastercard, etc.), which then sends the payment information to the credit issuer, who classifies the purchase into the appropriate rewards category.
Airlines, hotel brands, and rental car companies usually have their own code. For example, United’s MCC is 3000, Hertz’s is 3357, and Hyatt Hotels’ is 3640.
Here's another reason MCCs are important: taxes. The IRS implemented MCCs in 2004 as a way for businesses to categorize payment-card transactions as payments for services (taxable) or goods (not taxable).
How Do MCCs Work?
When you buy something with a credit card, the MCC is transmitted to the credit issuer. The code labels your purchase based on the merchant’s type of business. So if the merchant is classified with an MCC as a “travel” category, your purchase will likely be counted as a travel purchase. If you buy groceries at the supermarket, the MCC will typically show that you shopped at a “grocery store.”
The most important point to remember is that credit card merchant codes are based on the merchant, not the actual purchase. That’s why if you pick up a few groceries at a gas-station store, it will count as a gas purchase. Likewise, if your rewards card offers a bonus for shopping at office-supply stores, purchasing a printer from Amazon or Best Buy probably won’t count.
In some cases, a business may have multiple MCCs. For example, a company runs a salon in the front of its store and a spa in the back of the store. In this case, there could be two different MCCs: one for the salon and one for the spa.
Why Merchant Category Codes Matter
MCCs are particularly important for rewards cards that offer different tiers of points or cash back based on the type of purchase. In most cases, the MCC will align logically—a purchase on a travel site will earn travel bonuses—but there are some situations where you think you’re getting a 3% rewards rate for a purchase that only gets a 1% rate because of the MCC.
For instance, the American Express Blue Cash Preferred provides 6% cash back on groceries. However, the card’s fine print notes that any groceries you buy from a superstore like Walmart won’t get the bonus, and that’s because Walmart’s MCC is not a grocery-store code.
If you’re a points chaser, you should try to clarify how rewards are counted for places where you spend a significant amount of money. If you have a card that lets you choose your bonus category each quarter, like the U.S. Bank Cash+ Visa Signature, it’s important to make sure any planned big purchases align with merchants that have the correct category.
Other Exceptions To Be Aware Of:
- Dining at a hotel, theme park, or casino may not earn dining or restaurant bonus points.
- Buying groceries such as snacks or paper goods at an office-supply or discount store may not count as groceries.
- Fueling up at a superstore or warehouse club may not be coded as a gas purchase.
- Drugstore rewards may only include major chains, but not independent stores or pharmacies within larger superstores.
- Home improvement bonus rewards may not apply for some merchants that specialize in home furnishings, garden, and landscaping supplies.
Beyond rewards, another consumer use of MCCs is to help track spending. Some credit issuers provide year-end reports that show how much you spent on travel, dining, business services, or other categories. This data can help track expenses for tax purposes and everyday budgeting.
How To Find a Merchant’s MCC
If you’re curious to know how a particular merchant is coded, there are some resources available online to look them up. You can start with Visa’s search tool that lets you view the Visa merchant codes of any store by location. Citi has a PDF you can search to learn what each MCC means, but you can’t search a retailer’s MCC like you can with Visa’s list.
The other payment networks do not offer a similar search, unfortunately, but you can expect that American Express and Discover will have similar classifications.
Another way to do some MCC sleuthing on your own is to look carefully at your online transaction log. Usually, you can click on a transaction for more details and find either the name of the merchant category or the actual MCC. If not, you can always call your issuer to ask.
What To Watch Out For
Most rewards credit cards have some sort of disclaimer warning cardholders that MCCs can potentially sabotage their ability to earn bonus rewards.
To give you an idea, the Chase Freedom Flex card’s warning is: “Please note we make every effort to include all relevant merchant codes in its rewards categories. However, even though a merchant or some of the items that it sells may appear to fit within a rewards category, the merchant may not have a merchant code in that category. When this occurs, purchases with that merchant won’t qualify for reward offers on purchases in that category.”
The other tricky thing to be aware of is that some merchants might have multiple codes. For example, a big-box retailer might have one code if you check out at the in-house pharmacy counter, and another code if you use the regular registers.
Finally, no matter how an MCC might classify a business, a card issuer could have its own rules that override the codes. Take the huge umbrella category of “travel.” If you purchase airfare as part of a vacation package or book a vacation through a travel agent, though it could still have a travel MCC, American Express does not award additional points as it would for a direct airline or hotel booking. Another example is the Capital One Savor Rewards card, which offers 4% cash back on entertainment, but explains that golf courses or collegiate sporting events are not included.