Question about credit card reward "categories" | Credit card reward programs | Discussion forum

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.

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.

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.

For Visa Canada, "Utilities" and "Emerging Segments – Preferred" have lower interchange than "Grocery and Food Retail":

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.

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);

…

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.