You’re no doubt familiar with cards which offer 5% for groceries, 3% for gas, and so forth. Have you wondered how your credit card company decides what’s a grocery or what’s a gas station? No? You should, because this knowledge can earn extra credit card rewards.
Encoded in credit card transactions is something called the Merchant Category Code. The MCC is a four-digit number which tells the credit card processor what type of business a credit processing customer (i.e., a retailer) is. This is important to the processor because different types of businesses are charged different rates for credit card transactions. It’s helpful to understand MCCs is that they are used to define what qualifies as a category for cards which offer category bonuses.
If a card offers 3% back on “Entertainment”, for example, there will usually be a footnote listing the categories that count as entertainment to your issuer. You can then look up those categories to see what sorts of stores fall into them.
An interesting twist to all this is that it’s possible to for there to be two different MCCs within the same retail establishment. One good example of this phenomenon is Walmart.
The usual MCC for big box discount stores like Walmart, Target, and so forth is 5310. However, more and more Super Walmarts use MCC 5411, which is for grocery stores. Sometimes they do this just for cash registers in the supermarket section, and sometimes they’ll do this for the whole store. The upshot for you is that if you have a card paying 5% on groceries, you can get 5% on everything you can buy at Wal-Mart, not just groceries. If this is something to interest you, you’d have to inspect your credit card statement carefully and possibly whip out a calculator or a spreadsheet.
If you wonder what a retailer’s MCC is, try the Visa supplier locator. You can search by MCC, or look up the MCCs of specific retailers near you.