If you’re anything like us, you understand the value of carrying credit cards based on what you typically spend on to receive the maximum rewards.
While there are “no-frills” credit cards like the Standard Chartered Unlimited, which gives you 1.5% in cashback with no minimum spend and no caps, if you want to really optimise the cashback or miles you’re earning, you’ll need to look at specific credit cards that give you 5% and more in cashback or 4 miles per dollar of spending.
Unfortunately, these credit cards only give their highest rewards for spending in specific categories, such as dining, shopping, or online purchases. And the key to understanding whether a particular purchase qualifies as eligible spending is determined by this four-digit number known as the Merchant Category Code (MCC).
Here’s how MCCs work, the problem with them, and one great way to lookup MCC codes and even find out which credit card gives the best perks at a particular store!
What Are Merchant Category Codes (MCC)?
Merchant Category Codes are four-digit numbers assigned by the acquiring bank to merchants based on the type of product or service they provide.
It is important to note that while credit card issuing banks (like DBS, OCBC, UOB, Standard Chartered, etc) design the credit card rewards, they do not control the MCCs. Instead, they merely use the MCCs to track your transactions and give you the promised rewards accordingly.
The MCC system sounds simple enough, but once you start optimising your credit credit usage, you’ll bump into a few issues with MCCs.
The Problem With Merchant Category Codes
MCCs may not be very obvious for some merchants. Food & beverage stores are pretty straightforward, but shops that sell multiple genres of goods can be confusing. Is Muji classified as a stationery shop, furniture store, clothes retailer, or retailer of foodstuffs? Is a cafe run by a hotel considered a food & beverage joint or classified as part of the hotel?
MCCs differ even within the same store. If you ever thought you’re smart by going to an empty counter at a department store or large warehouse outlet, you might be surprised to learn that while you’re able to make your purchase, your spending would not be tagged correctly, and you end up missing out on the rewards you were aiming for. MCCs are assigned at the point-of-sale (POS) terminal level, and different POS terminals sometimes get different MCCs.
There isn’t a way to find out a merchant’s MCC beforehand. You might think that the staff at point-of-sale counters would be able to advise you on their terminal’s MCC, but you’ll likely be disappointed. Most of the time, unless they are avid credit card users themselves, they wouldn’t know what MCC was assigned to their point-of-sale terminal.
Definitions of spending categories differ among banks. This is less to do with MCCs itself but how they are used by banks. Something vague like “travel” may encompass different MCCs, depending on your issuing bank. This is important if you’re using a new credit card and are not aware of the different way of how your new issuing bank categorises transactions.
What Can You Do To Find Out MCCs
Now that we understand the challenges and importance of knowing what MCCs for particular merchants, how do savvy consumers find out a store’s MCC (and consequently, which card to use)?
In the past, there really wasn’t any way to find out unless you spend money there, and check your credit card statements the following month. Another alternative is combing through the terms and conditions of various credit cards you have.
Calling your credit card bank’s customer service hotline might work, but would probably annoy the staff who are there to help customers with ‘real’ problems or complaints.
That’s why we were so delighted to discover WhatCard, a local startup that aims to help consumers quickly look up MCC codes for their favourite merchants and maximise the credit card rewards for their transactions.
What Is WhatCard?
Launched in May 2019, WhatCard functions as a merchant search engine, where you can key in a merchant’s name to see the MCC, as well as a list of different credit cards currently available in Singapore, sorted by the amount of rewards given. You can even filter based on cashback or air miles.
Air miles rewards at Muji
This is really handy, since it now takes mere seconds to look up a merchant and decide which credit card I should use. The website is also a great tool for discovering cards that will give you better rewards, based on the merchants you usually visit.
There are already more than 1,500 merchants in their database, which the team adds on regularly based on actual user search data. WhatCard also has an interaction forum section with a budding community of fellow credit card enthusiasts who report errors or omissions, and discuss the latest credit card hacks.
The WhatCard community.
In its current form, WhatCard is already an immensely useful resource that I personally use regularly, especially when visiting a new store. In future, I imagine personalised search results based on the cards I own would be an obvious feature upgrade, and perhaps auto-complete/auto-correct for merchant searches.
Whether you’re a new credit card user or experienced card hacker, do give WhatCard a try and let them know what you think! Their community is also a great place to hang out for the latest credit card deals and tips.