To ensure you’re reaping as many rewards as possible you’ve got to be sure you’re actually shopping at the right merchants. How do you know you’re shopping at the right retailers? Well, that’s where something called a merchant category code comes in. Read on to learn all you need to know about these codes and why they are so important when it comes to taking advantage of credit card earn rates.
What is a merchant category code
A merchant category code (MCC) is a four-digit code that credit card companies assign to merchants to classify them. In Canada, every single merchant that accepts credit cards will have a merchant category code. This is not to say that every single individual store has its own unique code, rather, retailers are bunched into general categories based on their primary line of business. For example, a grocery store that sells mainly groceries but also sells some ready-to-eat foods would still be classified as a grocery store rather than a restaurant. And a gas station that sells food would still be categorized as a gas station and not a grocery store if that is its main form of business.
Merchant category codes are especially relevant to consumers with cash back or rewards credit cards that have categorized earn rates. Those codes determine how many points or how much cash back you’ll get on your purchase.
Understanding merchant categorizes is important because, for example, if you have a cash back card that gives you 2% cash back for recurring payments and another cash back card that gives you 2% for entertainment, you need to know whether your Netflix subscription counts as entertainment or as a recurring payment so you know what credit card to charge it to.
Likewise, if you have a credit card that gives you 4% for groceries but has a flat rate of 1% for other purchases like drug store purchases, then you’re better off not buying your eggs, milk and household goods at a store like Shoppers Drug Mart (which is generally classified as a drug store even though they sell lots of grocery items).
Paying attention to merchant codes will help get the most out of your cards by shopping at the right stores.
Popular merchant codes
To help you get your head around merchant category codes, here are some examples of some MCCs:
- Gas/service stations: MCC 5541 & 5542
- Groceries: 5411
- Restaurants: 5812, 5813, 5814
- Entertainment: there is a wide range of merchant codes for this category because it depends on what kind of entertainment it is (movie theatres, sporting events and tourist attractions): 7941, 7922, 7996, 7991, 7929, 7998, 7832, 7829
- Travel: the MCC for travel is very dependent on what form of travel you take, such as train, taxi or airplane and can be any of the following: MCC 7523, 4111, 7524, 4121, 4784
- Pharmacies/Drug stores: MCC 5912
More: What credit cards can be used at Walmart in Canada?
How to find a merchant category code
From the sampling of merchant category codes above, you are probably starting to see that knowing an MCC is not very helpful unless you know what specific merchant code goes with what specific store. For example, knowing that pharmacies and drug stores have an MCC of 5912 doesn’t actually tell you what exact stores qualify as pharmacies.
Unfortunately, it can be very difficult to find the merchant category code for a specific store because they are normally not listed on your credit card statements. Credit card providers in Canada don’t publicly map merchant category codes and merchants.
Essentially the only way you would know if you have shopped at the right store is if your purchase is given the corresponding earn rate by your credit card issuer. For example, I know that my local small-town grocery store was indeed categorized as a grocery store because I can see on my credit card statement that I got 4% cash back in awards for grocery purchases. If I had not gotten the 4% cash back, I would suspect that for some reason my local store did not have an MCC that fell into the grocery store category. Clearly, just shopping as you would normally and then checking your credit card statement to make sure your earn rates line up with your expectations is not a very practical way of discerning store MCCs.
Unfortunately, you’ll need to call your credit card provider to be absolutely certain that a specific merchant has been given a classification that corresponds to your credit card rewards or cash back earning categories (like, for example, travel, restaurant, and grocery categories). Yes, it may entail waiting on hold for a while, but the only way to be absolutely certain whether or not your favourite bakery is classified as a grocery store, an eatery, or neither, is to contact your credit card company.
Why does it matter?
I can guess what you’re thinking. Who cares about merchant codes? A grocery store is clearly a grocery store, a gas station is clearly a gas station and so on. Why do we possibly even need to worry about merchant category codes when it’s so obvious what category a store falls into. Right?
Wrong. Merchant categories codes are not nearly as straightforward as one would assume. Sure, it’s true that to a certain degree you can rely on common sense to figure out how a store would be classified. For example, you can sometimes safely assume that major stores like Loblaws, Longo’s, and Sobeys will indeed be categorized as grocery stores. Unfortunately, common sense only gets you so far. There are retailers that may have a completely unexpected merchant code.
Take Walmart for example: some credit card providers categorize Walmart as a grocery store but others classify it as a discount store. Therefore, if you have a reward credit card that has an accelerated earn rate for groceries you would not want to buy your groceries at Walmart if your card provider lists it as a discount store. Likewise, some credit card companies do not categorize Costco’s gas bars as gas stations but rather as wholesale or discount clubs, so you would not qualify for extra rewards even if you had a gas rewards credit card.
For me personally, the importance of understanding merchant category codes became obvious when I first got a money-back credit card. For one of my cash back categories, I selected “furniture” and then spent a month shopping at HomeSense for new furnishings and household goods. I assumed that my HomeSense purchases would fall into the furniture category and I would get 2% cash back on all my spending. Imagine my surprise when I got my statement and saw that I only got 0.5% cash back for all my HomeSense purchases.
When I called my credit card provider’s customer service, they informed me that HomeSense was classified as 5651, a “Family Clothing Store.” While the classification may seem ridiculous, at least if I had checked beforehand, I would have used my other cash back card that at least gets me 1% cash back on all purchases. Lesson learned!
How to maximize category code earnings
The examples above of the differing codes for Walmart and Costco and my own experience with my Tangerine Money-Back card highlight how a store’s merchant category code may not correspond with your expectations. Quite frankly, the codes may not even seem to correspond to common sense. If you have a rewards credit card with accelerated earn categories and want to be certain you’re maximizing your earning potential, it’s essential to contact your credit card provider to confirm specific retailer categories.
Another smart way to maximize earnings is by using the right credit card for the right code. Here’s an overview of the best credit cards to use in some of the most popular merchant categories:
- Gas: Apply for the TD Cash Back Visa Infinite* and it'll give you 3% cash back on groceries, gas and recurring bill payments† but has other great driving related extras like Emergency Road Services with Deluxe TD Auto Club Membership† and rental car discounts†.
- Groceries: Apply for the BMO eclipse Visa Infinite* Card which gets you 5 BMO Rewards points per $1 spent on groceries, as well as on gas, restaurants, and transit*. Get 1 point per $1 spent on all other purchases*.
- Restaurants: With the American Express Cobalt® Card you can stack up your rewards. Earn 5x points on eligible eats and drinks in Canada, including groceries and food delivery. Spend cap applies. You’ll also earn 3x points on eligible streaming subscriptions in Canada; 2x points on eligible rideshares, transit and gas in Canada; and 1x point on all other purchases.
- Pharmacies: With the incredibly flexible, no annual fee Tangerine Money-Back card you can choose “drug stores/pharmacies” as one of either two or three 2% cash back categories (and you select from 10 categories). Earn 0.50% on all your other everyday purchases.
- Travel: The TD® Aeroplan® Visa Infinite* Card earns you 1.5 Aeroplan points† on eligible gas, grocery and direct through Air Canada® purchases (including Air Canada Vacations®)† made with your card. Earn 1 point† for every $1 spent on all other Purchases made with your Card.
- Entertainment: Entertainment enthusiasts will appreciate the Scotiabank Passport® Visa Infinite Card. Earn 3x Scene+ points¹ on every $1 you spend at Sobeys, Safeway, IGA, Foodland and participating Co-ops and more. Earn 2x Scene+ points¹ for every $1 you spend on other eligible grocery stores, dining, eligible entertainment purchases and eligible daily transit options (including ride shares, buses, subways, taxis and more). Earn 1x Scene+ point for every $1 spent on all other eligible everyday purchases.
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†Terms and conditions apply.
*Terms and conditions apply
Final word
While having an understanding of merchant category codes is handy, it’s not enough when it comes to maximizing your credit card rewards earnings. To really get the most from your rewards credit cards, you need to confirm the MCCs of specific stores with your card provider. Being aware of what categories your favourite merchants fall into will guarantee the most lucrative credit card reward strategy.
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