Understanding MerchantMerchant merchant
An individual or business that accepts payments in exchange for goods or services. Category Codes and Why They Matter for Risk, Compliance, and Processing Costs
🔗 Published by PaymentsPedia
🧾 What is an MCC?
A Merchant Category Code (MCC) is a four-digit number assigned by card networks (VisaVisa visa A leading global payment technology company connecting consumers, businesses, and banks., MastercardMasterCard mastercard A global payments network enabling electronic transactions between banks, merchants, and cardholders., etc.) to classify a merchant’s primary business activity. For example, 5411 is for grocery stores, while 7995 is for online gambling. These codes help:
- Acquirers determine underwriting risk
- Card schemes monitor merchant behavior
- Set interchange rates and scheme fees
- Govern legal and compliance obligations (e.g., gambling, pharmaceuticals)
🚩 What Makes an MCC “High Risk”?
Certain MCCs are considered high risk due to one or more of the following:
Risk Factor | Explanation |
---|---|
🔁 High chargebackChargeback chargeback A dispute raised by the cardholder that results in reversal of a transaction. Can lead to penalties for merchants. rates | Subscription billing, recurring charges |
🎲 FraudFraud fraud Criminal deception involving unauthorized payments or use of financial credentials. vulnerability | Gambling, travel scams, synthetic ID fraud |
🔞 Reputational concerns | Adult services, tobacco, escort listings |
📜 Regulatory restrictions | Crypto, cross-border FX, money remittance |
🧾 Scheme-level registration | Card brandsCard Brands card-brands Major payment networks such as Visa, MasterCard, American Express, and Discover that manage transaction routing and rules. require explicit registration & monitoring |
Visa and Mastercard maintain MCC directories and require prior registration for many high-risk verticals. You can access the latest MCC list here:
📊 High-Risk MCCs Table
Below is a categorized table of commonly flagged high-risk MCCs by acquiring banks, PSPs, and card schemes. Those marked in red (🔴) require registration with Visa/Mastercard due to risk monitoring regulations.
1. 🧳 Travel & Ticketing
MCC | Description | Risk Notes |
---|---|---|
🔴 4722 | Travel Agencies & Tour Operators | Prone to cancellations, fraud, no-show disputes |
5962 | Direct Marketing – Travel | Discount clubs, telemarketing upsells |
🔴 7922 | Ticketing Agencies | Often includes secondary/resale ticketing |
2. 📞 Telecom, Network & Subscriptions
MCC | Description | Risk Notes |
---|---|---|
4812 | Telecom Equipment Sales | Often linked to device scams |
4814 | Telecom Services | Billing fraud and refund abuse |
4816 | Computer Network Services | Includes web hosting, ISP, VPN |
5966 | Direct Marketing – Outbound | Unsolicited marketing, high chargebacks |
5968 | Direct Marketing – Subscriptions | Recurring billing models |
5969 | Direct Marketing – Other | Radio/TV promotions, push-to-sell methods |
3. 💊 Pharma, Drugs, Tobacco
MCC | Description | Risk Notes |
---|---|---|
🔴 5122 | Drugs, Proprietaries & Sundries | Includes online pharmacies (heavily regulated) |
5912 | Drug Stores and Pharmacies | Includes both brick & mortar and e-pharmacies |
5993 | Cigars, Tobacco Stores | Age verification, compliance challenges |
4. 💻 Digital Content & Adult
MCC | Description | Risk Notes |
---|---|---|
🔴 7273 | Adult Dating & Escort | Reputational risk, fraud, legal restrictions |
7841 | Video Tape Rental | Often coded for adult content sites |
🔴 7994 | Video Games & Arcades | Skill-based gaming requires pre-approval |
🔴 7995 | Gambling, Betting, Casinos | Online casino, lottery, sports wagers |
5. 🏠 Real Estate & Timeshare
MCC | Description | Risk Notes |
---|---|---|
🔴 7021 | Timeshares | Often flagged due to long dispute windows, misrepresentation |
6. 🧾 Government & Remittance
MCC | Description | Risk Notes |
---|---|---|
🔴 9399 | Government Services – Lotteries | Requires registration for lottery ticketing |
🔴 4829 | Money Transfers, FX, Remittance | High AML/KYC risk, remittance fraud concerns |
💡 Pro Tips for Merchants in High-Risk MCCs
Tip | Why It Matters |
---|---|
✅ Work with experienced acquirers | Not all PSPs are equipped for high-risk MCCs |
✅ Ensure clear billing descriptors | Reduces chargebacks and confusion |
✅ Maintain strong KYC/AML processes | Especially in remittance, adult, or pharma |
✅ Get registered with card schemes | For gambling, dating, lottery, etc. |
✅ Monitor your MID’s chargeback ratio | Exceeding 1% can result in shutdown |
⚙️ Closing Thoughts
High-risk MCCs don’t mean illegal or unethical—they simply reflect complex regulatory environments and higher operational scrutiny. Merchants must maintain compliance, use robust payment processors, and implement clear refund and dispute policies.
🔍 Want a custom risk analysis or payment strategy for your business category?
📩 Contact PaymentsPedia for High-Risk MCC Advisory

Vibhu is a global payments leader and PhD researcher in real-time payments, dedicated to making payments simpler, smarter, and more inclusive. With 20 years of payments experience across Citibank, Adyen, IKEA, Snapdeal, iPayLinks — and markets spanning India, China, Southeast Asia, Europe, and Australia— he brings a truly global perspective to the future of money. Vibhu is also the founder of PaymentsPedia.com, a knowledge hub where he shares insights on cards, crypto, cross-border flows, and real-time rails.📧 vibhu@paymentspedia.com | LinkedIn