Banks use Merchant Category Codes (MCC) to determine if a merchant is eligible for reward points or cashback. However, some merchants may not qualify for these benefits, and customers may also be charged extra fees for making payments to certain merchant categories. Unfortunately, normal credit card and debit card users may not be able to identify a merchant's MCC before making a payment. To address this issue, it would be helpful if the MCC was displayed on the OTP page to make it more convenient for customers.

The Reserve Bank of India (RBI) should take into account the importance of customers knowing the MCC of a merchant before making a payment. Therefore, we suggest that all banks and online payment getaway providers display the MCC of the merchant on the OTP/transaction page for online transactions. For offline merchants, the MCC could be displayed on the POS machine, which would also be visible to customers. By implementing this system, customers will be able to easily identify merchants who do not qualify for rewards points or cashback and avoid making payments to those merchants that charge extra fees.

Another significant issue is the assignment of incorrect MCCs to merchants. For instance, a friend of mine who runs a travel agent business had submitted proper documents, yet the bank assigned him the "kirana store" MCC. This is just one example, and there are numerous similar cases. It is the responsibility of the bank/payment gateway provider to ensure that the correct MCC is assigned to each merchant.

To lead the way in customer convenience, we recommend that HDFC Bank, the largest private sector bank in India, along with the top three credit card issuers, SBI Card, ICICI Bank, and Axis Bank take the initiative to implement this system.
This would benefit their customers and set a new standard for other banks to follow.