Merchant identification vs Merchant Category Codes

Merchant Category Codes (MCCs) were introduced by the International Organization for Standardization (ISO), and are now maintained by card payments networks like Visa and Mastercard. They’re a global categorisation system for merchants, using 4-digit codes to signal the type of merchant. 

However, relying solely on merchant category codes in payment processing continues to limit the ability to recognise and analyse transactions, because the merchant name isn’t necessarily provided. This is especially the case for business bank account transfers, where the name of a sole trader might not obviously indicate the merchant services because it doesn’t necessarily match the trading name or merchant statement documents. 

Historically, these codes were introduced to help with expense claims, so in categories like airlines or hotels, each provider has their own code. In categories that are less common for expenses, though, such as groceries, every supermarket shares the same code. This limits usefulness and transparency. 

Leading banks and lenders overcome the challenges of silo’d merchant ID number or MCC data by performing the merchant identification process as part of their categorisation and enrichment.