High-Risk MCC Codes: A Helpful List

Among the long list of MCC codes used within payment processing to categorize industry types, a high-risk MCC code indicates a business operates in a high-risk industry. Typically, merchants in high-risk sectors have a harder time obtaining credit card processing services than other businesses—but with credit cards being the most popular form of payment in North America, it’s especially important for merchants to offer them as a payment method.^[1]BlueSnap. “20 Payment Method Statistics For Merchants To Keep In Mind“. Accessed on May 4, 2023.

While it can be challenging for businesses within some industries to obtain payment processing services, there are many merchant service providers that cater to high-risk businesses. If you choose the right provider, you will not only obtain credit card processing, but you’ll also gain the tools and resources you need to protect your business from financial threats. This guide lists high-risk MCC codes, outlines their uses, and explains how they can impact your business’s ability to process payments.

What Is a High-Risk MCC Code?

When a business applies for a merchant account, a four-digit merchant category code (MCC) is attached to the account accompanied by a merchant identification number (MID). While the MID identifies an individual merchant, the MCC code refers to a merchant’s industry type.

High-risk merchant category codes correspond to industries carrying an elevated risk of payment processing liability. As such, some merchant account providers avoid businesses with high-risk merchant category codes because they carry higher exposure to chargebacks, fraud, disputes, and other payment issues.

While an MCC code serves a variety of purposes, it’s primarily used by card networks to determine interchange fees, define rules, and offer incentives to merchants within specific industries. Card networks like Visa and Mastercard have specific rules and regulations in place for businesses with high-risk MCC codes. These rules help to mitigate the potential financial risks that cause significant losses to both card issuers and acquiring banks.

For example, some card networks require additional registration for businesses with high-risk MCC codes accepting card-not-present transactions (CNP) because these types of high-risk transactions carry additional liability. By imposing stricter guidelines, card networks aim to protect the entire payment ecosystem while providing merchants with access to secure payment processing.

What Are They Used For?

High-risk MCC codes help communicate a business’s overall risk level to stakeholders within the payment industry. Particularly, merchant account providers use these codes to determine if a business is too risky for its services. Since chargebacks and fraud account for more than $17 billion in losses for merchants each year, naturally, merchant account providers are exposed to this risk too.^[2]Citcon. “7 Chargeback Statistics Merchants Need to Know“. Accessed on May 4, 2023.

While conventional banks usually avoid servicing riskier merchants in an effort to decrease their liability, providers that have more risk tolerance may still require certain stipulations for high-risk merchants, such as mandatory reserve accounts. These practices may seem harsh, but they can significantly lower the impact of financial loss for business owners.

List of High-Risk MCC Codes

Below is an inexhaustive list of each high-risk industry and its correlating merchant category code:

Do You Need a High-Risk Merchant Account?

Businesses with high-risk MCC codes often have trouble accessing merchant services from traditional financial institutions. Fortunately, high-risk merchant account providers offer payment services to merchants with high-risk MCC codes. In doing so, these providers enable businesses in risk-prone industries to access credit card processing, payment gateways, virtual terminals, and other essential payment infrastructure. Additionally, these organizations have first-hand knowledge and expertise of the challenges faced by businesses operating in risky sectors. As such, they offer higher chargeback thresholds, industry-specific support, and other resources specifically tailored to the needs of high-risk businesses.

If your business is assigned a high-risk MCC code, it’s time to explore your merchant account options. When you partner with a reliable high-risk merchant services provider that possesses a deep understanding of your industry, you’ll unlock the level of payment support and account security your business needs.