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Question about credit card reward "categories"
February 19, 2024
11:18 pm
Loonie
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Can anyone answer these questions, based on your experience?

1. Do purchases through Skip the Dishes, UberEats, DoorDash etc count under "Restaurants" category?

2. Do Instacart or Voila (grocery delivery services) count as "Groceries"?

Thanks!

February 20, 2024
5:03 am
savemoresaveoften
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It’s the card company (I.e visa or Mastercard) that have each merchant categorized accordingly, not controlled by the card issuer. This is the reason why cards like the tangerine cc that rewards based on category is of zero interest to me, whether it’s free or not.
I have specific cards that either earn me 3% on everything or 4% of groceries and gas. That’s what I use.
For the names you mentioned, it’s highly unlikely they are classified as restaurants.

February 20, 2024
11:53 am
Loonie
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Yes, I know Mastercard and Visa set their own category rules, although I suspect they are basically the same. Info on either would be welcome.

Even 3 or 4% on groceries isn't any use if you order online and get them delivered but the delivery doesn't count, alas.

February 20, 2024
12:40 pm
gicjunkie
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FYI re categories: We have shopped at different Walmarts where one used a grocery store category and one did not. We got different cash backs from each store. I'm not exactly sure who is responsible for the vendor classification, the store or the credit card company.

February 20, 2024
12:49 pm
Peter
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For the Amex Cobalt card, all of DoorDash, SkipTheDishes, and Uber Eats are classified as restaurants.

February 20, 2024
3:45 pm
Loonie
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@gicjunkie: Yes, that's a known issue at Walmart. The stores that have a large grocery section (I think known as SuperStores or something similar) are listed by CC as "grocery", but not the rest.

@Peter: thanks; that's a good indicator for the restaurant category at least.

Anyone know anything about Instacart or Voila grocery deliveries?

February 24, 2024
9:48 am
green1
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It appears to be the merchant, not the card company, that decides on the category, and they pay fees to the card company based on that category. As a result, I've found that 90% or more of my recurring monthly bills are NOT "recurring payments" and therefore don't get the extra cash back rewards associate.
I suspect anything that can avoid the "restaurant" or "grocery" categories will do similarly.

February 24, 2024
10:33 am
Norman1
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Each card network has rules that are applied to determine the merchant category code. The merchant has input but does not decide. MasterCard Canada has assigned the grocery store category to the Walmart Supercentres. Visa Canada has not.

The recurring payment category is not a merchant category. There's a flag on each credit card transaction that can be set to indicate the charge is a recurring charge. Whether the flag is properly set or not depends on the merchant and the credit card acquirer the merchant uses.

Some merchants do odd things that can mess up rewards that are based on merchant category. One restaurant I ordered from apparently subcontracted out its deliveries to an alcohol delivery service! The delivery person puts the credit card charges through the delivery service's credit card merchant account and not the restaurant's. When the charge posts, neither the merchant name nor category are what one expects.

February 24, 2024
10:36 am
Warwick111
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I have used my TD cash Back Visa Infinite Card, CIBC Dividend cash back card, and Tangerine money back credit card at my local Walmart stores and none of them fall under the grocery category and defaulted to the misc/other category. However, when I used my RBC cash back Mastercard it is under the grocery category.

February 24, 2024
11:32 am
smayer97
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Norman1 said
Each card network has rules that are applied to determine the merchant category code. The merchant has input but does not decide. MasterCard Canada has assigned the grocery store category to the Walmart Supercentres. Visa Canada has not.

  

Then why does it vary from one MC to another, or one Visa to another, as per so many testimonies? There is clearly more to this than meets the eye. It looks like a lot of speculation from multiple parties, with no clear confirmed answer.

February 24, 2024
1:11 pm
Loonie
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February 24, 2024
8:08 pm
Norman1
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We looked into Walmart a while back.

Walmart Supercentres have the merchant category code 5411 (Grocery Stores, Supermarkets) for MasterCard transactions. The regular Walmart store have the merchant category code for "Discount Stores" for MasterCard transactions.

All Walmart stores have the merchant category code for "Discount Stores" for Visa transactions.

February 24, 2024
8:26 pm
Norman1
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smayer97 said

Then why does it vary from one MC to another, or one Visa to another, as per so many testimonies? There is clearly more to this than meets the eye. It looks like a lot of speculation from multiple parties, with no clear confirmed answer.

The merchant category code (MCC) is assigned when the transaction is submitted to the credit card acquirer. The MCC is tied to the card terminal and does not change from one MasterCard to another or from one Visa card to another. Reports to the contrary are nonsense.

Same with reports that merchants avoid the groceries category. Canadian Visa card issuers, of other than the Visa Infinite cards, currently receive the third lowest interchange of 0.95% from merchants in that category. That's 24% less than the usual 1.25% interchange from electronic card-present transactions.

March 21, 2024
4:47 pm
Loonie
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Norman, do you happen to know what the two categories are even cheaper for the merchant than groceries?

We recently got a Mastercard with categories for the first time. I realize you were citing Visa, but assume they are similar.

We are puzzled by the fact that our local butcher and fishmonger are not listed on MC as "grocery". The card statement says that the categories are determined by the merchant. Why would a merchant choose a category with a higher fee? I assume butcher and fish are not the first and second lowest fees.

In addition, I am puzzled that a bakery/patisserie with no seating is listed as "fast food" but gets points in the "grocery" category.

I can confirm that Instacart grocery deliveries count as "grocery". This includes frozen foods (and likely other perishables) ordered online and delivered from Costco by Instacart. It does not include non-perishables ordered online and delivered from and by Costco.

If we're going to stick with this system, it needs to be more predictable than it seems to be. We sometimes patronize specialty stores for groceries, but it seems we can't count on them being included. I would have thought it was obvious that meat and fish were groceries, and am not interested in having to have to divine the mind of Mastercard!

March 21, 2024
8:35 pm
Norman1
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For Visa Canada, "Utilities" and "Emerging Segments – Preferred" have lower interchange than "Grocery and Food Retail":

Fee Program Classic, Gold,
Platinum
Infinite Visa Infinite
Privilege
Industry Program – Grocery and Food Retail 0.95% 1.15% 1.95%
Industry Program – Utilities* $0.75 CAD per transaction
Emerging Segments – Preferred* 0.80% 1.00% 1.95%

MasterCard Canada is different and currently does not have a preferred interchange for credit card purchases through groceries stores.

Merchants don't choose their merchant category code (MCC) and, consequently, don't choose their category either. There are rules from each card network (MasterCard, Visa, and so on) that are used to determine a merchant's MCC on that network.

For example, Mastercard: Quick Reference Booklet—Merchant Edition has the rules for MasterCard.

MCC 5411 (Grocery Stores, Supermarkets) has specific requirements:

MCC 5411: Grocery Stores, Supermarkets
Merchants that sell a complete line of food merchandise for home consumption. Food products for sale include groceries, meat, produce, dairy products, and canned, frozen, prepackaged, and dry foods. Other products for sale may include a limited selection of housewares, cleaning and polishing products, personal hygiene products, cosmetics, greeting cards, books, magazines, household items, and dry goods. These merchants also may operate specialized departments such as an in-store deli counter, meat counter, pharmacy, or floral department.

For convenience stores that sell a limited selection of products or specialty items, use MCC 5499.

MCC 5411 requirements are not going to be met by a merchant who sells only meat or fish. Such a merchant would be assigned MCC 5422 or 5499:

MCC 5422: Freezer, Locker Meat Provisioners
Merchants that sell fresh, frozen, or cured meats, and fish, shellfish, and other seafoods, and includes bulk retail sellers of meat for freezer storage. Meat markets included in this MCC may butcher their own animals, or buy meat from others.

For poultry shops, use MCC 5499.

MCC 5499: Miscellaneous Food Stores: Convenience Stores, Markets, Specialty Stores
Merchants that sell specialty foods not elsewhere classified. This MCC includes specialty food markets, health food and dietary supplement stores, delicatessens, poultry shops, coffee stores, vegetable and fruit markets, ice cream and yogurt shops, and convenience stores.

For convenience stores that also sell automotive gasoline, use MCC 5541.

For merchants that primarily sell meat and seafood, use MCC 5422.

It is up to each card issuer whether or not to also include MCC 5422 and MCC 5499 in its grocery reward category.

Bakeries have a different MCC than fast-food restaurants and grocery stores:

MCC 5462: Bakeries
Merchants that sell bakery goods, and often prepare the goods on the premises. Products for sale may include bagels, bread, cookies, doughnuts, pastries, pies, and wedding cakes.

MCC 5814: Fast Food Restaurants
Merchants that sell prepared food and beverages for immediate consumption either on the premises or packaged for carry-out. Fast food restaurants may or may not operate a drive-up window for ordering and pick-up, and may or may not provide table service by a waiter or waitress. In any case, orders are paid for at the counter or at a drive-up window. Fast food restaurants include cafes, cafeterias, grills, coffee shops, diners, pizza parlors, sandwich bars or shops, deli shops, and snack shops. If table service is provided, a gratuity may be added to the bill. Such merchants generally do not sell alcoholic beverages.

March 21, 2024
9:09 pm
Loonie
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Thanks, Norman. That's very helpful, even if not what I wanted to hear.

I will check tomorrow on Tangerine's exact wording wherein they say the merchants determine categories, more or less. I suspect they put that in because they get a lot of complaints from people like me who didn't get what they thought they'd signed up for.
Anyway, this gives me a better idea of what to beware of. I suspect this card will not be a keeper; I don't want to have to think this hard. Shopping and comparison shopping etc is bad enough all by itself!

March 23, 2024
10:47 am
Norman1
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The current Tangerine credit card rewards program terms and conditions include only

  • MCC 5411 (Grocery Stores, Supermarkets) and
  • MCC 5462 (Bakeries)

in the program's Grocery reward category. Tangerine Bank also disclaims any control over the MCC of a merchant:

7. Qualifying 2% Money-Back Categories: You may choose your 2% Money-Back Categories from the following list of eligible Merchant Category Codes (MCC). The MCCs are established using generally accepted payment logic, and industry standards. They are:

  • Grocery: merchants classified as “Grocery Stores and Supermarkets” (MCC 5411, 5462);

Eligible categories are subject to change, without notice to you. The current list of qualifying 2% Money-Back Categories is available for viewing when you log in at tangerine.ca and go to “Manage Rewards” under your Credit Card Account. Merchants control their MCC categorization such that Tangerine has no control over how a merchant is classified.

In the past (November 2015), MCC 5422 (Freezer, Locker Meat Provisioners) was also included:

7. Qualifying 2% Money-Back Categories: You may choose your 2% Money-Back Categories from the following list of eligible Merchant Category Codes (MCC) and transaction type. The MCCs are established using generally accepted payment logic, and industry standards. They are:

  • Grocery: merchants classified as “Grocery Stores and Supermarkets” (MCC 5411, 5422, 5462);
March 23, 2024
11:47 am
Loonie
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"Merchants control their MCC categorization such that Tangerine has no control over how a merchant is classified."

This statement from Tangerine is similar to what I read on their statement. However, it doesn't entirely make sense. If merchants all "controlled" their MCC code, surely they would all choose "grocery" since it has the lowest interchange fee, and they are all keenly aware of this fee as they complain aout it regularly.

I can see that Tangerine doesn't control it; they control the categories they are willing to accept for 2%.

I checked the bill for the Instacart items from CostCo which received 2%. It included fresh and frozen food as well as one non-perishable snack item. Other grocery deliveries coming directly from Costco but not via Instacart would not be expected to get 2% and have not been tested..

Presumably all MasterCards use the same category definitions, and a given merchant would have the same category for all MasterCards? The only difference, then, between issuers, would be which MCC they accepted for which rewards.

March 24, 2024
8:25 am
Norman1
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I agree. The statement doesn't make sense. That's because it isn't correct.

Merchants don't control their MCC. The card acquirer the merchant goes through applies the rules of the card network to determine the merchant's MCC.

Merchants don't include Level 3 data (item level details) with card transactions on personal credit cards. So, the card issuer doesn't know what items were purchased with a personal card and cannot reward based on what was purchased.

The card issuer has the MCC of the merchant (Instacart in the example) that submitted the charge. That merchant may not be the merchant (Costco) that fulfills the order.

I remember the charges for delivered food from one restaurant didn't receive 2% cashback from my Tangerine credit card. It turned out the credit card charges were put through by an alcohol delivery company and not the restaurant itself! So, the restaurant had subcontracted out its deliveries and the subcontractor had to provide its own at-the-door credit card terminal.

Yes, all MasterCards would see the same MCC's for a merchant. The MCC is tied to the card terminal.

Sometimes, a merchant can have more than one MCC. I found in the past that one gas station had a different MCC 5542 (Automated Fuel Dispensers) for charges at the pump than the MCC 5541 (Service Stations) for charges in the store.

March 25, 2024
12:28 am
Loonie
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Yes, that all makes sense, but we are left with the problem of not being sure if a purchase at a merchant we've not patronized before will show up in the category where it belongs. When the issuer advertises "groceries", then we reasonably expect grocery merchants to be included.

In the past month we patronized two independent bakeries (in person). Both produce their own bread and pastries; neither has seating. One counted as "grocery"; the other got no cashback premium.

I don't like it when Tangerine misleads us about its credit card rewards system. They are clearly trying to deflect criticism of MasterCard by pointing at the merchants, and they are trying to discourage your complaints..
The net result is that I will probably never get 2% for all the merchants that ought to qualify for the premium categories, and this dilutes the value of the card. Something to consider when evaluating "category"-style cards. Will work better for people who only shop at supermarkets and are creatures of habit.

In addition: Seems to me that Shoppers Drug ought to count as a grocery store, but I'm sure it doesn't! Is it a pharmacy that sells groceries, or a grocery that sells pharmaceuticals? My local one sells fresh, frozen, and non-perishable food and a ton of cosmetics.
Yet my Bulk Barn doesn't count as "grocery". And so on...

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