Merchant Category Codes (MCCs) quietly influence many critical decisions in digital payments—from transaction approvals and processing fees to rewards eligibility and compliance checks. Yet, for many Indian businesses and developers, MCCs remain poorly understood.
If you’ve ever wondered why certain transactions attract higher charges, why some card payments fail unexpectedly, or how banks decide reward eligibility, the answer often lies in the MCC code assigned to your business. This guide breaks down the merchant category code list, explains how MCCs work in India, and shows why managing the right MCC merchant code can directly impact revenue, compliance readiness, and customer experience.
TL;DR — Merchant Category Code (MCC) at a Glance
- MCC is a 4-digit code that classifies businesses based on what they sell.
- Used by banks, card networks, and regulatory reporting frameworks to assess risk, fees, and eligibility.
- Impacts interchange rates, rewards, refunds, approval logic, and GST reconciliation processes.
- Incorrect MCCs can lead to higher costs, declined payments, or compliance issues.
- Especially important for Indian SMBs, marketplaces, SaaS platforms, and fintech APIs.
What Is a Merchant Category Code (MCC)?
A Merchant Category Code (MCC) is a four-digit numeric code assigned to a business by acquiring banks and card networks (Visa, Mastercard, RuPay, etc.) to classify the type of goods or services the merchant provides.
Each MCC code maps a business to a standard category, such as restaurants, education, fuel, healthcare, or professional services, using a globally recognised MCC list.
Why Merchant Category Codes Exist
MCCs are not just labels—they are decision-making inputs for the entire card payments ecosystem.
They help stakeholders:
- Assess transaction risk
- Determine interchange and MDR
- Apply regulatory rules
- Enable accurate reporting and taxation
- Control rewards, cashback, and offers
In India, MCCs play a critical role in RBI-regulated card payment flows, GST reporting, and sector-specific compliance.
Who Assigns the MCC Code in India?
Contrary to popular belief, businesses do not directly choose their MCC.
The MCC merchant code is assigned by:
- Acquiring bank (or payment aggregator)
- Based on:
- Nature of business
- Merchant onboarding documents
- Website/app description
- Transaction behaviour
- Aligned with card network rules (Visa, Mastercard, RuPay)
Once assigned, the MCC flows through:
- Payment gateways
- Card networks
- Issuing banks
- Reporting systems
How MCC Codes Work in a Card Payment Flow
Step-by-step breakdown:
- Customer initiates a card payment
- The merchant’s acquiring bank sends transaction data
- MCC code is included in the authorization request
- Issuing bank evaluates:
- Risk
- Allowed categories
- Rewards eligibility
- The transaction is approved or declined
A mismatch in MCC can change this outcome entirely.
Merchant Category Code List: Common MCCs in India
Below is a simplified merchant category code list with examples relevant to Indian businesses:
| MCC Code | Category |
| 5411 | Grocery Stores |
| 5812 | Restaurants |
| 5912 | Pharmacies |
| 4111 | Transport |
| 4814 | Telecom services |
| 5732 | Electronic sales |
| 7399 | Business services |
| 8211 | Schools, elementary and secondary |
| 5541 | Petrol pumps |
| 6012 | Financial institutions |
Note: The full merchant category code list runs into hundreds of MCCs, maintained by card networks and banks.
Why MCC Codes Matter for Indian Businesses
1. Transaction Approval & Decline Rates
Certain cardholders restrict spending by category:
- Corporate cards
- International cards
- Prepaid cards
If your MCC code doesn’t match your actual business, transactions may fail, even if the customer has sufficient balance.
2. Interchange Fees & MDR
MCCs influence:
- Merchant Discount Rate (MDR)
- Interchange sharing between banks
For example:
- Education and government services often attract lower MDR
- High-risk categories may face higher charges
This directly impacts your net revenue per transaction.
3. GST and Regulatory Reporting
In India:
- MCC data can feed into GST reconciliation
- Sector-based reporting for regulators
- Financial audits and compliance reviews
Incorrect MCCs can raise red flags during audits.
4. Rewards, Cashback & Customer Experience
Issuing banks use MCCs to:
- Calculate cashback
- Apply reward exclusions
- Enable EMI eligibility
Example:
A customer expecting dining cashback won’t receive it if your restaurant is wrongly tagged under a generic services MCC merchant code.
5. Risk, Fraud Monitoring & Chargebacks
MCCs help banks:
- Flag unusual transaction patterns
- Apply velocity limits
- Investigate chargebacks
High-risk MCCs may face:
- More frequent reviews
- Rolling settlements
- Stricter KYC checks
How to Check Your MCC Code
Indian businesses can check their MCC code by:
- Reviewing acquiring bank onboarding documents.
- Checking payment gateway dashboards.
- Contacting bank relationship managers.
- Reviewing settlement reports.
Developers can often see MCC values in transaction metadata via APIs.
Common MCC-Related Mistakes to Avoid
- Using a generic services MCC for a specialised business.
- Changing the business model without reviewing the MCC.
- Assuming MCC doesn’t affect pricing.
- Ignoring MCC during international expansion.
- Not educating finance teams about MCC impact.
Conclusion: Why Merchant Category Codes Matter
Merchant Category Codes may seem like a small detail, but they play a crucial role in how payments are processed, fees are applied, and compliance is maintained. For Indian businesses, understanding the MCC code assigned to your operations helps ensure smoother transactions, accurate reporting, and better control over costs.
Regularly reviewing your MCC merchant code and aligning it with your actual business activities can prevent declined payments, optimise processing fees, and improve customer experience. In today’s fast-growing, data-driven payments ecosystem, paying attention to MCCs is a simple yet effective way for SMBs and startups to stay efficient, compliant, and ready to scale.
Frequently Asked Questions (FAQs)
1. What is an MCC code in India?
An MCC code is a four-digit number used by banks and card networks to classify merchants based on the type of goods or services they provide.
2. Where can I find the merchant category code list?
The merchant category code list is maintained by card networks like Visa, Mastercard, and RuPay, and implemented by acquiring banks and payment aggregators.
3. Can two businesses in the same industry have different MCCs?
Yes. Differences in offerings, risk profiles, or business models can result in different MCC merchant codes.
4. Does MCC affect international card payments?
Absolutely. Issuing banks often apply stricter rules for cross-border transactions based on MCC.
5. How often should businesses review their MCC?
At least once a year, or whenever there’s a significant change in business model or offerings.
