Consumers today are searching for the best ways to save money on the products they buy daily or weekly. Credit card rewards programs are an excellent way they can do that. Companies also realize that rewards programs create loyal customers and are willing to pay shoppers for the purchases they make that they might otherwise buy at other stores. Consumers sometimes find though that they don’t get the number of rewards points they expected from a shopping trip. This can often be attributed to the merchant category classification code, known as the MCC Code, under which a business or retailer falls. Many consumers aren’t even aware that these codes exist or how they affect rewards programs.
In 2004 the Internal Revenue Service (IRS) started requiring any business that accepted either Visa or MasterCard credit cards to have a four-digit number indicating its primary type of business. Today, Discover and American Express credit cards also have these codes. Merchant category classification codes apply to a surprising range of businesses. Veterinarians, freight handlers, confectionery stores, health and beauty providers, hotels and medical and dental labs are just a few of the businesses that have been assigned MCC codes for use with credit cards. Within this list of businesses are sub categories of companies such as airlines, hotels and rental cars companies that have numbers assigned to individual companies or chains such as Delta Airlines or United Airlines, Hertz Rent-A-Car and Sheraton Hotels. Even universities and professional schools receive a code when they start accepting credit cards.
The MCC Code : Where it Started
The original purpose of the MCC Code was to help the IRS better handle the way businesses reported their taxes. The codes also benefited the businesses themselves. The codes identified a company’s primary area of business, which aided in setting interchange fees, or the money banks charged other banks to process credit card payments. Some business categories or industries have a lower interchange fee than other categories. Along the way, credit card companies began to use the codes to help determine how their customers were spending money and developed rewards programs for their most loyal customers based partly on these codes.
Consumers who aren’t aware of the existence of the merchant category classification codes aren’t as likely to maximize their savings when they participate in rewards programs. When a consumer uses a credit card tied to a rewards program at a business that is part of a narrowly defined category, such as a roofing company or a veterinarian, he’s likely to receive all the rewards points he’s due. However, problems arise when he shops at a retailer such as Target or Walmart. These types of businesses offer a wide range of products, but the MCC Code covers just one category of products. For example, Target stores are considered grocery stores so the rewards points are maximized when a shopper buys his groceries there. However, groceries, or any food for that matter, isn’t eligible for a credit card’s rewards program when it’s purchased at a 7-Eleven store. Those stores are listed as gas stations and so aren’t eligible for grocery rewards points.
Confusion also arises when consumers use rewards programs tied to different credit cards. The various credit cards in some cases assign different merchant category classification codes to businesses and industries, although the categories are primarily the same for Visa and MasterCard. The impact is greatest when the same company or business, Target for instance, is classified in a different category at different locations. A store close to a consumer might be classified as a grocery store while one several miles away receives the classification code for a discount retailer. It may not seem important, but it can make a big difference in the rewards a consumer gets as a result of his monthly spending at the store.
MCC Code Rewards Points : How to Maximize
Consumers can take some steps to help ensure that they maximize the rewards they receive from their credit card purchases. Knowing that the merchant category classification codes exist is essential. Once a consumer is familiar with the way his purchases are classified, he can determine how to best use his credit card rewards programs to help him get the most rewards points possible. Experienced rewards points consumers recommend checking the VISA Supplier Locator tool that lets a consumer input the specific business or store and its location to get the proper merchant category classification code. This tool will tell him whether a restaurant inside a gas station, for example, is considered a retail dining establishment. When he’s looking to collect points from retail dining establishments to get rewards, he needs to know that the Subway sandwich shop in his neighborhood gas station isn’t part of that classification.
Collecting points for credit card rewards programs is beneficial and exciting, particularly when they’re part of a consumer’s goals for a big purchase or a trip, for instance. It’s worth it to take the extra time to make sure the money he’s spending counts towards those goals.