What is a merchant category code?¶

A merchant category code is a classification assigned to a merchant based on the type of business or service it provides.

Avoid this assumption: The code proves exactly what was purchased.

The code may indicate a broad category such as groceries, hotels, gambling, transport or professional services.

It is usually assigned through the merchant’s acquiring or payment arrangements and may not describe every product or service sold.

A supermarket can sell alcohol, electronics, gift cards and groceries under one category. A marketplace may process payments for many different sellers.

The code can still help investigators identify the nature of the merchant, assess patterns and direct further enquiries.

Preserve the code, merchant descriptor, merchant ID, transaction reference, date, time, amount and location.

Ask the issuer, processor or acquiring bank what the code represented at the relevant time.

Compare it with merchant records, receipts, order details, invoices and delivery information.

Do not infer criminal purpose or specific goods solely from the category.

A merchant may also be miscoded, use a processor’s category or operate several business lines under one account.

Repeated payments to the same category may be relevant, but the evidential meaning depends on the wider context. The code may help prioritise merchant enquiries, but it should not replace them.

When reporting, state that the transaction was classified under a particular merchant category rather than asserting what was bought.

Operational takeaway¶

Use merchant category codes as broad classification evidence and obtain merchant or order records before concluding what goods or services the payment related to.