⚠️ High-Risk MCCs: What Merchants & PSPs Need to Know

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

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🧾 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)

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🚩 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:

• 🔗 Visa Merchant Data Standards Manual (MCC List)
• 🔗 Mastercard MCC List

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📊 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

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💡 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

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⚙️ 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