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Understand Merchant Category Codes to Maximize Credit Card Rewards

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Understand Merchant Category Codes to Maximize Credit Card Rewards

Rewards credit cards are favorites around the NerdWallet office—especially those that give us additional rewards for spending on the things we value most. But what happens when you don’t get the extra rewards on your bonus category purchases? Here’s what you need to know about merchant category codes and how they’re used to determine extra rewards.

What are merchant category codes and how do they work?

Merchant category codes (MCCs) are numbers that classify businesses by what they sell or the service they provide. These four-digit codes are assigned by payment card organizations—Visa, MasterCard, American Express and Discover—when the business first starts accepting these methods of payment. Here’s a list of all the MCCs, provided by the IRS.

Purchases made in stores are automatically categorized by the MCC of said store when reported to your credit card issuer, which uses these codes to determine whether or not you get the additional rewards. Note that these codes are assigned by the credit card networks and can’t be changed by your issuer.

Oftentimes, a merchant may seem inaccurately categorized because its code only represents one part of its business. Generally, the MCC is assigned based on what makes up the majority of the business in question. Of course, this may change over time, but MCCs are assigned when merchants first started accepting credit cards from the various payment networks and aren’t updated each time a business changes. Codes may be changed eventually, but these changes happen sporadically and infrequently.

To add to the confusion, retailers with multiple branches may be categorized differently from one branch to the next. For instance, using the Visa Supplier Locator to search for Target stores near  NerdWallet HQ, we found that some locations are listed as “discount stores,” while others are “grocery stores.” And some of the electronics counters in those same stores are labeled as “electronic sales.”

Large retailers, like Target, are likely to have different codes within the same store, depending on which counter you purchase your items at. So if you’re buying groceries and the store’s general code is for grocery stores, but your items are rung up in electronics, your purchase will be categorized as such.

How can I find out the codes in my local stores?

Use the Visa Supplier Locator to look up MCCs for the stores you frequent. Always check to see if said store has multiple MCCs and ring up your purchases in the correct area whenever possible. That way, you’ll get the additional rewards you deserve.

My store is categorized correctly, but I’m still not getting my rewards—what gives?

If the coding is correct, ensure that you haven’t exhausted your additional rewards for the quarter or year. There tends to be a cap on very high rewards rates, like those greater than 2%. If you’ve hit your annual or quarterly cap, you’ll only receive the base rewards rate until the year or quarter ends. If you haven’t hit your limit but you aren’t getting your extra rewards, call your issuer to ask about the discrepancy.

The takeaway: If your credit card offers additional rewards on certain types of transactions, the issuer will use MCCs to determine which retailers fall within the bonus rewards parameters. These are assigned by the payment networks, and therefore your issuer can’t change them. If you aren’t getting your proper rewards, ensure that you haven’t hit your rewards caps and contact your issuer if something seems amiss.


Couple buying groceries with credit card image via Shutterstock.