Understanding where MCCs help (and where they get in the way) makes day-to-day decisions easier: you’ll know why some transactions carry higher fees, why certain shopping services or direct marketing models are classed as high risk, and when non-card options such as Pay Now (Open Banking) or trade credit can sidestep MCC-driven friction entirely.
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Merchant category codes (MCCs) are the quiet labels that follow every card transaction you accept. They’re four-digit numbers used by card networks and payment processors to describe your primary merchant type - from professional services and office supplies to transportation services, medical services and beyond. MCCs influence how credit card issuers price transactions, how fraud systems score risk, how credit card rewards are allocated to cardholders, and sometimes how tax rules are applied. If you accept card payments in the UK - online, in-app or by phone - your MCC is part of your operating reality, whether you’ve thought about it or not.
Understanding where MCCs help (and where they get in the way) makes day-to-day decisions easier: you’ll know why some transactions carry higher fees, why certain shopping services or direct marketing models are classed as high risk, and when non-card options such as Pay Now (Open Banking) or trade credit can sidestep MCC-driven friction entirely.
Merchant category codes (often written as merchant category codes MCCs or MCC codes) are four-digit numbers assigned to a business to describe the general category of goods or services it sells. While the label is simple, the ecosystem around it is sophisticated: card networks (e.g. Visa, Mastercard) and their partners use the code to route authorisations, apply network rules, and inform downstream decisions - pricing, risk, and in some cases compliance.
An MCC is meant to reflect your primary category - the thing customers most often buy from you - rather than every line item you might sell. A professional services firm that also sells a bit of computer peripheral equipment on the side will still be coded as professional services; a wholesaler of heating equipment won’t receive a new MCC just because it also sells window covering or home furnishings. Some categories are broad (e.g. general retail), others very specific (there are MCCs for ticket agencies, tour operators, automated fuel dispensers, even hat cleaning shops, fur shops, and locker meat). The goal isn’t to micromanage your catalogue; it’s to give the networks a reliable high-level description for the whole merchant.
You don’t pick your own code. In practice, your payment processors/acquirer set the MCC when they onboard you - based on your application, website, and proofs - under the rules issued by the card networks. If you pivot your business, add new lines, or believe you were miscoded, you can ask your provider to review it. Reclassification isn’t guaranteed, but it’s common when a business materially changes (for example, a professional schools provider expanding into membership organisations with dues).
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Inside the card rails, MCCs travel with each authorisation and clearing message. They won’t change the item a customer bought, but they do colour how the system treats the transaction from pricing to risk to downstream analytics.
Network and acquirer pricing models often vary by MCC. Some categories are cheaper to process because chargeback rates are historically low and the risk profile is stable; others are priced higher to reflect loss experience and operational complexity. For example, inbound telemarketing merchants and outbound telemarketing merchants are historically riskier than a local supplier of office supplies, so fees may differ. MCCs can also influence whether a transaction qualifies for specific interchange programs (think: utility services vs general retail), which is why two merchants taking the same £1,000 card payment may see different costs.
This is one reason many UK businesses complement cards with Pay Now (Open Banking) bank payments for eligible B2B transactions: Open Banking transfers don’t use MCCs at all and can avoid card-based fee structures, especially where high values or repeat invoices dominate.
Fraud systems use hundreds of signals; MCC is one of the foundational ones. A transaction that looks normal for medical services may look odd for casino gaming chips or off-track betting. Risk engines often dial sensitivity up or down depending on category, which can affect approval rates and manual review queues. Some MCCs are widely treated as high risk MCCs - for example certain direct marketing and telephone sales models - so processors will build extra controls around them. That doesn’t mean you can’t accept cards; it means you’ll be asked for more documentation and may see tighter thresholds until a track record is established.
For UK Suppliers handling business-to-business transactions, MCCs matter in four practical ways.
First, cost and acceptance. Your category can influence per-transaction pricing and the likelihood of friction at the point of sale. If you operate in a sector that networks class as higher risk (some types of insurance services, government services, or data processing models, for example), your fee structure may differ from a low-risk shop selling accessory shops stock or musical instruments. Optimising your payment mix - using Pay Now for higher-value orders and reserving cards for buyers who insist - can keep cash flow healthy without compromising the customer experience.
Second, reward expectations. Cardholder credit card rewards are typically tied to MCC, not to SKUs. Your customers may expect particular rewards when paying you (fuel points at automated fuel dispensers, club points at country clubs/private golf courses, airline miles with air carriers). Understanding this dynamic helps you explain why some corporate cards are happier to pay you than others, and why a customer financial institution might treat your category as outside their preferred program.
Third, reporting and compliance. Some UK businesses use MCCs to tag expenditure for internal policy (e.g., a company bans spend in cocktail lounges or limits professional sports clubs hospitality). On the Supplier side, the MCC sits in your settlement data and can affect how your partner categorises your transactions for risk monitoring. And while MCCs aren’t the same as SIC codes for tax, certain industry-specific reliefs and schemes sometimes reference merchant type at a high level, so it pays to keep your classification accurate.
Finally, disputes and fraud protection. In categories where disputes are more common (say, certain retail outlet services or restoration services), processors may require clearer documentation and offer different chargeback guidance. Knowing the expectations for your MCC - and documenting service delivery accordingly - improves your odds when something is challenged.
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You won’t need a list of merchant category codes to run your business day-to-day, but a feel for the landscape helps align expectations with your provider and your customers. Here’s a high-level snapshot of common categories you’ll see in UK B2B trade. (Names vary slightly by credit card networks; the intent is consistent.)
Two quick notes that prevent confusion: 1. MCCs are not SIC codes; SIC is for company classification and filings, while MCCs ride with card transactions. 2. Your MCC follows the merchant, not the customer: if a professional services firm sells a one-off product, the transaction still carries a professional-services MCC.
MCCs are a card-rails concept. That’s useful context when you’re deciding how your B2B customers should pay. If your category attracts higher fees or stricter risk treatment, you have two complementary levers:
Offer a non-card path for eligible transactions. With Pay Now (Open Banking), customers authorise a bank transfer directly from their app; there’s no MCC involved, and bank-to-bank settlement can reduce cost on high-value or repeat invoices. Approval rates are strong because the customer authenticates with their bank.
Use trade credit to lift conversion without stretching your cash flow. For buyers who need time to pay, trade credit (including modern “Pay Later” instalments) reduces friction and encourages repeat orders. With iwocaPay’s Pay Later, eligible UK limited companies can spread costs while you, the Supplier, are paid upfront - so you gain the loyalty benefits of offering trade credit without carrying the risk of bad debt on approved transactions. This sits outside card rails and avoids MCC-driven rules entirely.
Together, these options let you accept payments in a way that fits your category: cards for buyers who insist or where rewards are part of their policy; Pay Now for quick, low-cost settlement; and Pay Later when flexible payment terms close a deal.
