5945 Hobby, toy, and game shops

Introduction

• What it is: This MCC covers businesses specializing in retailing hobby supplies, toys, and games.
• Risk level: Medium — Certain products may have age restrictions or safety concerns.
• Acceptance difficulty: Medium — Mixed acceptance based on product range and customer demographics.
• Typical business models: toy stores; game shops; hobby supply shops; model train retailers; craft stores.
• For merchants: Expect moderate MDR; potential for periodic reserves; clear product categorization may facilitate approvals.
• What PSPs expect: Standard business registration; suitable licenses for selling specific goods; comprehensive inventory list during onboarding.

Payment Insights & Benchmarks

Merchants in the Hobby, Toy, and Game Shops MCC should prepare for unique payment dynamics influenced by seasonal trends, customer demographics, and the nature of purchases. Understanding these aspects can help in optimizing payment processes and enhancing customer experiences.

Payment methods

Cards: widely accepted, but often subject to high chargeback rates, especially for online transactions.

• E-wallets: popular among younger consumers, offering swift transactions and convenience.
• BNPL (Buy Now Pay Later): gaining traction as it allows customers to stagger payments, particularly useful for higher-ticket items.
• Gift cards: commonly used for gifting, but may incur additional fraud risk if not managed properly.

Authentication & security

Strong Customer Authentication (SCA) is increasingly mandated, helping reduce fraud but may affect conversion rates.

• Implementing 3DS can enhance security at the cost of potential drop-off at checkout.
• Ongoing fraud monitoring is essential, especially in a market that attracts impulse buys.

Benchmarks (indicative, not guaranteed)

MDR: typically higher than standard e-commerce due to elevated fraud risk and chargebacks.

• Rolling reserves: may be required to mitigate chargeback exposure, often reaching higher than 10%.
• Settlement cycles: usually longer, often around 5-10 days depending on the provider.
• Chargeback ratios: frequently above average, influenced by impulsive buying behavior and the nature of the products.
• Card approval rates: may be lower than average, particularly for international transactions.

Key metrics to monitor

Chargeback rates segmented by product type and channel (online vs. in-store).

• Authorization rates across different payment methods to identify friction points.
• Customer feedback related to the checkout experience to refine payment processes.
• Overall transaction value and frequency during peak seasons for cash flow management.

Risk & Compliance

Merchants operating under the MCC 5945 face significant scrutiny due to potential risks associated with fraud, chargebacks, and compliance with AML/KYC regulations. Payment service providers (PSPs) and acquirers expect merchants to maintain robust practices to minimize these risks effectively.

Chargebacks & fraud

Friendly fraud can be prevalent, especially concerning digital game purchases, with customers claiming they did not authorize transactions.

• Bonus abuse may occur with gamers exploiting promotional offers repeatedly across multiple accounts.
• Common abuse patterns include the unauthorized use of gift cards or stolen credit card information.
• Mitigation tools such as velocity checks, device fingerprinting, and behavioral analytics are crucial for tracking suspicious patterns and preventing abuse.

AML/KYC expectations

Merchants must implement strong customer identity verification (IDV) processes, including comprehensive checks against sanctions lists and politically exposed persons (PEP).

• Source-of-funds checks are essential, especially when transactions exceed certain thresholds or exhibit unusual patterns.
• Manual review triggers may arise from large or frequent purchases, inconsistent purchase histories, or the use of VPNs/proxies that obscure user locations.

Operational red flags

Lack of transparency concerning ownership and the identities of individuals behind the merchant can raise alarms for PSPs.

• Traffic sources that appear inconsistent or originate from restricted or unverified regions may lead to further scrutiny.
• The absence of established customer support frameworks or unclear return policies can contribute to higher chargeback rates.
• Merchants should be cautious of unclear marketing practices that could mislead customers about products or promotions.

Onboarding Checklist

Merchants under the MCC 5945 (Hobby, Toy, and Game Shops) should prepare a complete onboarding package before approaching PSPs or acquirers. A well-structured submission improves approval chances and shortens review times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for the relevant business activities
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for payouts
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the live platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information
• KYC flow details, including IDV providers and thresholds

Technical integration & security

payment architecture overview with supported methods/providers

• description of SCA/3DS flows, retry logic, and tokenization
• PCI DSS compliance status and data storage policy

Operations

customer support coverage (languages, 24/7 if available)

• SLA for dispute handling and chargeback response
• deposit, bet, and payout limits; self-exclusion mechanisms
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certification are important for merchants operating under this MCC as payment service providers (PSPs) often require compliance verification for onboarding. The recognition of licenses can vary significantly based on the merchant’s jurisdiction and their target markets.

Operator licenses

Local business licenses — required in most jurisdictions to legally operate a retail store, including hobby, toy, and game shops.

• Sales tax permits — necessary for collecting sales tax in the regions where the merchant operates.
• Age-restriction compliance — if selling items that require a minimum age, like certain games or toys, merchants may need specific licenses or permits to verify age restrictions.
• Content-specific licenses — some toys or games may require safety certifications, such as from the American Society for Testing and Materials (ASTM) or the Consumer Product Safety Commission (CPSC).

Geo-restrictions

Some countries may have restrictions on the sale of certain types of games or toys that are considered inappropriate or harmful, affecting inventory decisions.

• Regional differences in sales tax and licensing requirements necessitate compliance with local laws, which can vary widely even within countries.
• Online sales may face additional scrutiny in regions with strict regulations against e-commerce for certain categories of items.

Certifications & audits

Compliance with ASTM safety standards for toys to ensure products meet safety regulations.

• Regular audits for inventory and cash handling practices, particularly for businesses with online sales components.
• Certification related to environmental standards may be required if merchandising products made with specific materials or processes.

Official Definitions & Network Comparisons

This section shows how major card networks define this MCC and highlights practical differences that affect merchant onboarding.

Explanation:

Though the definitions are fairly consistent, the subtleties in terms such as "retail" or "stores" may indicate how the networks classify and handle different operations. Differences in policies, such as compliance checks or fee structures, can also impact onboarding processes. Common issues faced during acceptance include incomplete inventory disclosures and operational limitations based on geographical location.

Alternative MCC Codes

Merchants often confuse this MCC with other categories. The table below shows which codes are related, why they are confused, and what risks misclassification brings.

Rule of thumb for merchants:

Ensure that your primary business activity aligns closely with your selected MCC. For hobby or toy shops, if the focus is on hobby items or toys, MCC 5945 is appropriate; however, mislabeling as an office supply or sporting goods store can lead to compliance issues and financial risks.

Best Practices for Merchants

Merchants operating under the MCC 5945, which encompasses hobby, toy, and game shops, need to adhere to best practices to ensure smooth payment processing and customer satisfaction. By implementing these strategies, businesses can reduce risks associated with disputes and enhance their relationships with payment service providers.

Classification & transparency

always use the correct MCC to avoid account issues and ensure compliance

• clearly present product descriptions, policies, and any age restrictions on your website
• maintain transparency around inventory sourcing, pricing, and promotions

Fraud & chargeback reduction

deploy 3DS or step-up authentication for high-risk transactions, especially for significant purchases

• utilize clear billing descriptors and provide immediate order confirmations via email and SMS
• implement event logging for transactions to facilitate thorough dispute investigations

Payment acceptance optimization

offer multiple payment methods, including credit/debit cards, digital wallets, and local payment solutions

• analyze and route transactions based on geographic location to optimize approval rates
• separate merchant IDs (MIDs) for different product lines to tailor services and reporting

Operational discipline

monitor KPIs like payment acceptance rates, chargeback ratios, and customer feedback to identify improvement areas

• conduct regular compliance audits and update internal processes to remain aligned with industry standards
• designate a team member to manage disputes, ensuring timely and effective communication

Payouts & liquidity

create funding buffers to manage rolling reserves that may be required by payment processors

• establish automated checks for anti-money laundering (AML) when processing withdrawals, especially for larger amounts
• routinely assess payout timelines and monitor for any unusual withdrawal patterns that may indicate risk

Business Scope & Examples

This MCC includes businesses that primarily sell hobby items, toys, and games, catering to consumers who engage in various recreational activities. Merchants in this category typically provide a retail environment for items that enhance leisure time through creativity, play, and entertainment.

Models

hobby shops selling model kits, art supplies, and craft materials

• toy stores offering a wide range of children's toys and games
• game shops focused on board games, card games, and video games
• specialty shops for collectibles, such as action figures and trading cards

Borderline cases

Online marketplaces — platforms that facilitate the sale of hobby and game items from multiple vendors may not be classified under this MCC if primary operations differ.

• Sporting goods stores — while they may sell items for recreational activities, they generally focus on sports equipment and may classify under a different MCC.

Signals for correct classification

primary business involves selling retail items directly to consumers

• focus on a variety of products for hobbies, toys, or games
• business does not prominently feature services or experiences beyond retail sales