High-Risk MCC Codes: A Complete and Helpful List
In the world of payment processing, understanding Merchant Category Codes (MCC) is essential, especially for businesses that fall into the “high-risk” category. High-risk MCC codes can affect payment processing fees, account stability, and even how certain transactions are handled. This guide provides a straightforward overview of high-risk MCC codes, explaining what they are, why they matter, and listing some of the most common codes in this category.
What Are Merchant Category Codes (MCC)?
Merchant Category Codes, or MCCs, are four-digit numbers assigned by credit card networks to identify the type of business or service a merchant provides. These codes help processors and banks classify businesses into categories based on the goods or services they sell. For example:
- 5411: Grocery Stores
- 5732: Electronics Stores
- 5812: Restaurants
However, some MCC codes represent industries that are considered high-risk due to factors like higher chargeback rates, regulatory scrutiny, or potential for fraud.
Why Are Some MCC Codes High-Risk?
When businesses have an MCC associated with a high-risk industry, payment processors might consider them riskier to work with. Reasons for this include:
- High Chargeback Rates: Industries like travel, online gaming, and subscription services tend to see more disputes and refunds, which increases the risk for payment processors.
- Legal and Regulatory Issues: Certain industries, such as CBD sales and online gambling, are subject to heavy regulation, making compliance complex.
- Fraud Potential: Some high-risk businesses, such as telemarketing or cryptocurrency trading, are more susceptible to fraud.
High-risk businesses usually face higher processing fees, stricter contract terms, and potential challenges in finding a processor willing to handle their transactions.
Examples of High-Risk MCC Codes
Understanding high-risk MCC codes can be vital for businesses when choosing a payment processor. Here are some common high-risk MCC codes:
| MCC Code | Description |
|---|---|
| 4829 | Money Transfer Services |
| 5122 | Drugs, Drug Proprietors, and Druggists |
| 5962 | Direct Marketing – Travel |
| 5966 | Direct Marketing – Telemarketing |
| 5967 | Direct Marketing – Inbound Teleservices |
| 6211 | Securities – Brokers/Dealers |
| 7273 | Dating and Escort Services |
| 7995 | Gambling and Betting |
| 8651 | Political Organizations |
| 5933 | Pawn Shops |
How Do High-Risk MCC Codes Affect Payment Processing?
Having a high-risk MCC code means that payment processors might charge higher fees or apply stricter terms to mitigate the risks associated with your business. Here are some specific impacts:
- Higher Processing Fees: High-risk businesses typically face fees between 4% and 10% per transaction, while low-risk industries might only pay 2% to 4%.
- Account Stability: Some processors impose rolling reserves, holding a percentage of each transaction as security against chargebacks.
- Increased Scrutiny: Processors may frequently monitor transactions and compliance, making it necessary for businesses to maintain transparency.
Top High-Risk MCC Codes by Industry: –
Let’s dive deeper into some high-risk industries and the MCC codes that apply to them.
1. Financial Services:
- MCC 6211: Securities Brokers/Dealers
- MCC 4829: Money Transfer Services
- Risk Factors: High chargebacks, potential for fraud, regulatory oversight.
2. Travel and Hospitality:
- MCC 5962: Direct Marketing – Travel
- MCC 4722: Travel Agencies and Tour Operators
- Risk Factors: High cancellation rates, seasonal demand fluctuations, and possible travel bans.
3. Subscription and Continuity Services:
- MCC 5968: Subscription Services
- MCC 7299: Other Personal Services (subscriptions like streaming services)
- Risk Factors: Frequent chargebacks, and dissatisfaction with subscription renewals.
4. Health and Wellness Products:
- MCC 5122: Drugs, Drug Proprietors, and Druggists
- MCC 5912: Drug Stores and Pharmacies
- Risk Factors: Regulatory scrutiny, and chargebacks related to health product claims.
5. Telemarketing:
- MCC 5966: Telemarketing Sales
- MCC 5967: Inbound Teleservices
- Risk Factors: High chargeback rates, frequent fraud cases, compliance challenges.
6. Adult Entertainment:
- MCC 7273: Dating and Escort Services
- MCC 7841: Video Tape Rental (for adult content)
- Risk Factors: Social stigma, potential legal implications, and high chargebacks.
Payment Processing Tips for High-Risk Businesses: –
Managing payment processing as a high-risk business can be challenging, but with the right strategies, you can reduce costs and improve stability. Here are some tips:
- Choose the Right Processor: Find a payment processor like eCheckplan experienced with high-risk industries. Some specialize in handling the compliance and security requirements of high-risk MCCs.
- Keep Chargebacks Low: Proactively manage customer disputes, provide clear return policies, and use chargeback prevention tools to avoid excessive fees and potential account suspensions.
- Maintain Compliance: If your business is in a regulated industry (like CBD or gambling), staying compliant with all relevant regulations can reduce risk and improve processor relations.
- Consider Alternative Payment Methods: Some payment options, like eChecks, can provide lower fees or fewer restrictions than traditional credit card processing.
How to Determine Your MCC Code
If you’re unsure of your MCC code, here are some steps to help:
- Contact Your Processor: Most payment processors will assign an MCC code when you set up your account.
- Check Statements: Often, the MCC code will appear on your billing or transaction statements.
- Online MCC Code Lookup: Some websites offer MCC code lists, allowing you to search for your business type and find the associated code.
If your business falls under a high-risk MCC, working with a processor like eCheckplan can help you navigate the additional challenges that come with high-risk payment processing. eCheckplan specializes in eCheck solutions for high-risk businesses, helping to reduce transaction fees, lower chargebacks, and improve transaction approval rates.
High-Risk MCC Codes Summary: –
Understanding MCC codes and their implications is essential for businesses in high-risk industries. To recap:
- High-Risk MCC Codes: Codes assigned to industries prone to chargebacks, fraud, or regulation.
- Industries: Include financial services, travel, health and wellness, telemarketing, and adult entertainment.
- Challenges: Higher fees, more scrutiny, potential account instability.
- Solutions: Partner with a high-risk-friendly processor, consider eCheck payments, and focus on compliance and chargeback management.
With knowledge of your MCC code and its impact, you can make informed decisions about payment processing, save on fees, and keep your business running smoothly. By working with a high-risk processor like eCheckplan, you’ll have support tailored to your business’s unique needs, helping you grow with confidence in a challenging market.
