A numeric identifier, assigned by card networks like Visa or Mastercard, categorizes a business based on the type of goods or services it provides. It is utilized to track and report sales data, determine interchange fees, and identify potential fraud. For example, a clothing retailer operating within the retail giant’s ecosystem would be assigned a specific identifier distinct from, say, a restaurant also operating within the same overall business structure.
The precise identifier is critical for accurate financial reporting, tax compliance, and proper processing of credit and debit card transactions. Understanding the assignment and application of these codes can lead to lower transaction costs due to correct interchange fee assessment. Historically, these classifications have evolved alongside the expansion of retail and the diversification of business models, adapting to accommodate new industries and methods of payment processing.
