Merchant Codes List: Identifying High-Risk Categories

A Merchant Category Code (MCC) is a four-digit number used by payment processors and card networks to classify businesses based on the goods or services they provide. While most MCCs are associated with standard risk levels, some fall into the high-risk category, which can significantly impact the way a business operates, especially regarding payment processing and merchant accounts.

High-risk MCC codes play a significant role in risk assessment and fraud prevention, enabling financial institutions to identify potential vulnerabilities and take appropriate measures to safeguard against fraudulent activities. Understanding the common high-risk MCC codes is essential for financial institutions, payment processors, and regulatory bodies to effectively manage and mitigate risk in today’s ever-evolving financial landscape.

This article will delve into the significance of MCCs and highlight a list of high-risk categories that businesses should be aware of.

What is a High-Risk MCC Code?

A high-risk Merchant Category Code (MCC) is a four-digit number assigned to businesses within industries that are deemed to have a higher level of financial or regulatory risk. These codes are used by financial institutions, payment processors, and regulatory agencies to identify and manage the unique risks associated with different types of merchants. The classification of an MCC as high-risk is determined by factors such as the nature of the products or services provided, the historical prevalence of fraud within the industry, and specific regulatory considerations.

Industries categorized under high-risk MCCs include sectors like adult entertainment, gambling and casinos, cryptocurrency, travel agencies, telemarketing, and online auctions, among others. Businesses within these categories are often subject to greater scrutiny and may need to meet additional requirements imposed by financial institutions due to the elevated risk their operations represent.

Understanding and monitoring high-risk MCCs is essential for effective risk management and fraud prevention. Financial institutions often apply stricter underwriting standards, enhanced surveillance, and additional security protocols to mitigate the risks associated with these high-risk merchants. Regulatory bodies may also enforce more rigorous compliance measures and monitoring systems to ensure that businesses within these MCCs operate in accordance with legal and ethical guidelines.

List of High-Risk MCC Codes

Understanding which MCCs are considered high-risk can help businesses prepare for the challenges associated with operating in these categories. Here’s an inexhaustive list of each high-risk industry and its correlating merchant category code^[1]:

How to Manage a High-Risk Business

If your business falls into a high-risk category, there are several steps you can take to manage the associated challenges effectively:

• Choose the right payment processor: Work with a payment processor that specializes in high-risk industries. These providers understand the unique challenges of your industry and offer tailored solutions to help mitigate risk.
• Implement strong fraud prevention measures: Utilize advanced fraud detection tools and implement strict security protocols to protect your business from fraudulent activity. This can help reduce chargebacks and build trust with payment processors.
• Maintain a strong financial profile: Keep detailed financial records and maintain a healthy credit profile. This can help you negotiate better terms with payment processors and reduce the perceived risk of your business.
• Focus on customer service: Excellent customer service can help prevent disputes and chargebacks. Make sure your refund and return policies are clear and easily accessible, and resolve customer issues promptly.
• Stay compliant: Ensure your business complies with all relevant regulations and industry standards. This not only reduces the risk of legal issues but also helps build trust with payment processors and financial institutions.

CommerceGate: Your Trusted Partner for High-Risk Businesses in LATAM

Operating in a high-risk industry requires a payment partner that understands the unique challenges and can provide tailored solutions to meet your needs. CommerceGate is equipped to handle the complexities of high-risk merchant accounts, offering:

• Tailored solutions matching your business needs: CommerceGate provides customized payment solutions designed to address the specific risks and challenges of your industry.
• Top-tier security and high authorization rates: With advanced security protocols and fraud prevention measures, CommerceGate ensures that your transactions are secure and your authorization rates remain high.
• Transparent pricing tiers with no hidden fees: CommerceGate offers fully transparent pricing, so you know exactly what you’re paying for. There are no hidden fees, and our rates are competitive even for high-risk businesses.
• Superior customer service: CommerceGate’s dedicated support team is always available to assist you with any issues or questions, ensuring your payment processing runs smoothly.

By partnering with CommerceGate, high-risk businesses can access reliable payment processing solutions that help manage risk, reduce costs, and support growth.

^[1] https://paymentcloudinc.com/blog/high-risk-mcc-codes/