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MCC Code Vs. SIC Code

There are various kinds of industries in credit card processing, and each of these get varied Merchant Category Codes and SIC codes (Standard Industrial Classification Codes). These varied codes tend to have an impact on the interchange rate paid by every specific business. Less interchange cost is offered by some codes, and every month these can save money for you – the merchant. Read on to find out about MCC Code vs. SIC Code.

What are MCC Codes?

MCC or Merchant Category Code is actually a 4-digit code that is aimed to classify businesses of similar types into a particular industry. The payments industry uses MCC for categorizing businesses as per market segment. The fact here is that credit card issuers like MasterCard and Visa set the MCC codes. A Merchant Category Code and Standard Industrial Classification Code is assigned to every merchant account, when the merchant processor first approves of it.

With the help of these codes, credit card companies can categorize what kind of service or goods is sold by a specific merchant, and how interchange rates can be affected by the same. In the United States, the MCC of a business can allow the IRS to decide whether there is a need for payment for the purpose of taxation. This lets credit card agencies categorize the kind of services or goods that are sold by a merchant, and the way interchange rates can be affected due to the same.

What are SIC Codes?

SIC (Standard Industrial Classification Code) is a four-digit code established by the U.S. Government. Every industry is categorized by this code into various industry groups, and the numbers are in the range of 0100 to 9800. In these 4-digit codes, the initial two numbers help in identifying the entire industry. The last two numbers particularly mention the categorization of that a business in the industry. The IRS uses SIC Codes for filing businesses into an industry. These are also used by merchant processors and major banking institutions.

In 1937, the U.S. Department of Commerce developed these 4-digit codes for the first time for the classification of each type of industry. SIC codes follow a pattern:

·Industry group

·Major group


In these codes, the major group is indicated by the first two numbers. The industry group is suggested by the first three numbers. A wide range of SIC codes constitutes every division. 

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