Merchant category codes: How to earn more cash back

Credit card companies use merchant category codes to determine transaction fees and reward earnings on your card. These four-digit codes may also affect how rewards accrue on your account.

Knowing your Merchant Cash Category (MCC) can help you take full advantage of shopping portals such as Chase Ultimate Rewards or Capital One Offers to maximize cash back rewards on purchases you would make anyway at other retailers.

1. Know Your MCC

Merchant Category Codes, commonly referred to as MCCs, are four-digit codes used by credit card processors/banks to categorize your business based on what services and goods it sells. Your MCC can directly affect how much it costs you to process transactions; for instance if it falls in the “Furniture and Home Goods” MCC category (MCC 5421) then fees could likely be significantly less compared with contractors in “Electrical Plumbing Heating” MCC category – considered high risk.

Consumers using rewards cards benefit greatly from knowing which retailer made the purchase, so they know which retailers can help them earn additional cash back. A consumer’s monthly credit card statement typically displays this information; although, in most cases it won’t display its four-digit code specifically; instead it usually shows just a name of category such as Entertainment or Grocery Store.

Merchant Category Codes (MCCs) play an essential role for both consumers and merchants themselves. Used for tax reporting, interchange promotions and corporate card usage control. Both Visa and Mastercard provide online listings of MCCs that help businesses determine which MCC is most relevant for them.

Though you might not have much control over the Merchant Category Code assigned to your business, you should still care about its assignment for many reasons. For instance, high risk merchants might face higher processing fees regardless of how few chargebacks they experience.

Your MCC can have a significant effect on how customers perceive you and could have an effect on both brand reputation and sales. For instance, if you own a convenience store with an attached restaurant, having the MCC of “grocery store” could put it into the grocery store category which tends to be seen more favorably by consumers than restaurants or entertainment venues; this could encourage some consumers to be more trusting of your business and spend more with it.

2. Know Your Customers

“The customer is always right” is a mantra often repeated in business classes. Understanding your customers goes beyond knowing their names, ages, sexes and income levels; it requires taking an in-depth look into what they buy, why they buy it and their frustrations and challenges. For best results, experts advise conducting online searches with keywords related to these customers while interviewing sales staff members or using POS data from your POS system to create buyer personas (fictional representations of ideal customers).

Once you understand who your customers are, targeting them with marketing efforts becomes much simpler. Plus, using data collected to refine products and services to better meet customers’ needs. Understanding your customers can also help create strong customer relationships that lead to word-of-mouth recommendations and new sales opportunities. One simple way of building these relationships is sending out a survey after customers make purchases. There are plenty of free tools that will enable you to design an engaging questionnaire for your customers. Asking simple questions such as, “Why did you choose this product over another?” can go a long way towards understanding customers and building loyal buyer relationships.

3. Know Your Competition

Sun Tzu once wrote that understanding your competition requires two steps – knowing both yourself and the enemy; in one hundred battles you will never lose one.” Conducting research on competitors is critical to understanding how you can differentiate yourself from them, run competitor analysis, and identify opportunities for your business. Competitors can generally be divided into direct and indirect categories: direct competitors provide products or services comparable to yours that operate in similar geographic markets while indirect ones offer similar products or services through another business category while possibly being located nearby.

One effective method for identifying competitors is by perusing online reviews and ratings. Just make sure that your evaluations are objective so that the data collected is fair.

4. Know Your Credit Card Rewards

Merchant category codes have an impactful and varied impact on businesses that utilize credit cards as part of their purchasing. Major card brands such as Visa, Mastercard, Discover and American Express assign Merchant Category Codes (MCCs) to businesses to determine interchange fees they charge when processing a transaction; MCCs can also influence rewards programs; for instance some cards only offer bonus rewards when purchases made at retailers with certain MCCs; making sure you know your MCCs can save money in processing fees while maximizing benefits from rewards programs. Taking the time to understand your merchant Category Codes can save money in processing fees while optimizing benefits programs offered by credit card brands like Visa Mastercard/ Mastercard/ Discover/ American Express can benefit your business in many ways!

MCCs (merchant classification codes) are four-digit codes used to categorize merchants according to the types of goods or services they offer. Even if a merchant sells multiple types of products or services, typically there will be one MCC that represents most of its sales. Card issuers find MCCs particularly helpful for quickly identifying purchases when reviewing statements.

Card issuers utilize Merchant Category Codes (MCCs) to calculate rewards points on purchases made with their cards, so it is crucial for merchants to understand which MCCs their business uses in order to use the correct codes and maximize rewards.

Card issuers and merchant networks generally publish lists of merchant category codes online, making it relatively simple for merchants to discover what their MCC is. Many of these lists can be searched by business name or zip code and can often yield the most accurate results; card issuers may even be able to provide this information upon request from merchants without websites.

Consumers also play a vital role in understanding MCCs; knowing the MCCs of stores you frequent is vital if you want to maximize your credit card rewards program and use it wisely when making major purchases like home improvement projects, for which a card offering 3% cash back may be ideal.