merchant category code (MCC)
A merchant category code (MCC) is a four-digit number assigned to a business when its card acceptance is set up, classifying what it sells. The card schemes publish the list. The code affects interchange rates, scheme rules, risk treatment and whether some card products work at all.
Every business that accepts cards carries an MCC, set by the acquirer or the onboarding provider from the schemes' published lists. It tells the issuing bank what kind of shop the payment came from, and a lot hangs on that: some interchange categories differ by MCC, certain cards are blocked at certain codes, and a code that implies higher risk brings tighter monitoring and sometimes a reserve.
For a software platform onboarding its customers as sub-merchants, the MCC is a decision made once per customer and hard to undo. A platform serving one trade will usually map every customer to one or two codes, but a mixed customer base needs care: a golf club with a bar, a shop and a membership scheme is three businesses to a card scheme. Mis-coding is a scheme rule breach for the regulated acquiring partner, which is why onboarding asks what a customer actually sells.
For a business, the watch point is a code that does not match what you do. It can mean paying more interchange than you should, or a higher rate of declined cards from issuers that do not recognise the category.