Crypto Merchant Classification Codes
It’s no secret that in many countries around the world, people prefer to pay with cards. But when it comes to crypto, cards can be extremely difficult to integrate as a reliable payment method. Authorization rates are often low — especially for credit cards — and users are left confused and upset when trying to purchase crypto with the payment method they are accustomed to using. In this article, we explore why cards are a deceptively difficult payment method for fiat <> crypto payments, and what C14 is doing to make things easier for card users around the world.
WHAT ARE MCC CODES?
Merchant Categorization Codes (MCCs) are four-digit codes assigned to merchants by credit card companies, such as Visa and Mastercard, to classify the type of goods or services a merchant provides. MCCs play an important role in determining the transaction fees that merchants must pay to card issuers, as well as in determining the rewards that cardholders receive from their credit card companies.
MCCs are used to categorize merchants into specific groups based on their products or services. For example, a merchant that sells books might be assigned the MCC code 5942, while a restaurant might be assigned the MCC code 5812. These codes allow credit card companies to track and analyze spending patterns and to tailor their services to the needs of their customers.
MCCs are also used to determine the interchange fee that merchants must pay to card issuers when they accept card payments. This fee is a percentage of the total transaction value and is used to cover the cost of processing the transaction, as well as to provide a profit for the card issuer. MCCs are used to calculate interchange fees because different types of merchants have different costs associated with processing card payments. For example, a merchant that sells digital products might have a lower cost per transaction than a merchant that sells physical goods, and therefore might be assigned a lower interchange fee.
In addition to determining interchange fees, MCCs can also be used to determine the rewards that cardholders receive from their credit card companies. For example, a cardholder who uses their card at a merchant that sells groceries might earn more rewards than a cardholder who uses their card at a merchant that sells clothing. This is because credit card companies want to encourage cardholders to use their cards at merchants that generate high transaction volumes and provide a high level of security.
In brief, Merchant Categorization Codes are an important part of the credit card industry. They play a role in determining the fees that merchants must pay to card issuers, as well as the rewards that cardholders receive from their credit card companies. Understanding how MCCs work can help merchants to save money on transaction fees and can help cardholders to maximize their rewards.
MCC CODES IN CRYPTO
The Merchant Categorization Code (MCC) for cryptocurrency transactions can vary depending on the specific credit card issuer and the country in which the transaction is processed. However, some common MCCs used for cryptocurrency transactions include:
5815 — Digital goods — books, movies, music, and NFTs
6051 — Non-financial institutions — foreign currency, money orders, and travelers cheques
It’s important to note that credit card companies may classify cryptocurrency transactions differently and may use different MCCs, depending on the specific details of the transaction. It’s also worth noting that some credit card companies may not allow cryptocurrency transactions at all, or may categorize them differently than traditional transactions.
HOW C14 CAN IMPROVE CARD AUTHORIZATION RATES
By understanding MCC codes and how they play a role in authorization rates — especially in the crypto space — C14 can optimize upstream conversion rates and solve a lot of the current pain points for users. For example, if we know a given card transaction will fail based on the MCC code being used by that issuer, we can preemptively message the user and suggest trying a different card. This is in comparison to the current status quo, where users are given little to no information about why their go-to card is failing on a given transaction.
Proactive guidance and a deep understanding of payments infrastructure guides the entire C14 user experience. This is why we believe C14 is well positioned to create the next generation of fiat <> crypto payment flow, and solve many of the existing pain points for both card users and users of alternative payment methods around the world!
PARTNER WITH C14
We make it easy for users around the world to purchase digital assets with local fiat payments. If you’re ready to partner with C14, we’d love to talk!
Contact C14 today or learn more about us using the links below.
