5994 News dealers and newsstands

Introduction

• What it is: This MCC encompasses businesses primarily involved in selling newspapers, magazines, and other periodicals.
• Risk level: Low — These businesses typically have stable, predictable revenue streams.
• Acceptance difficulty: Low — Their established reputation generally simplifies the payment acceptance process.
• Typical business models: newsstands; bookstores; magazine retailers; online magazine subscriptions.
• For merchants: Expect easy onboarding processes; typically low merchant discount rates (MDR); often minimal reserves required.
• What PSPs expect: Common requirements include business registration; clear product offerings; and a stable return policy.

Payment Insights & Benchmarks

Merchants in this MCC should anticipate moderate payment processing challenges compared to standard e-commerce. Factors like method acceptance, transaction size, and customer demographics can significantly impact payment experience.

Payment methods

Cards: generally accepted but can suffer from varying approval rates based on the issuer.

• E-wallets: gaining popularity for convenience, particularly among younger demographics.
• In-store payments: important for local transactions; mobile Pay options can enhance customer experience.
• Subscriptions: if applicable, set up for recurring payments can help stabilize revenue.

Authentication & security

Basic authentication is typically required, with optional 3DS based on risk profile.

• Preventing unauthorized transactions is necessary, but careful monitoring for friendly fraud is also essential.
• Merchants should adapt to evolving fraud patterns to protect against chargebacks.

Benchmarks (indicative, not guaranteed)

MDR: often higher than standard e-commerce due to the nature of transactions.

• Rolling reserves: could be calculated based on risk; expect some providers to apply them.
• Settlement cycles: may be longer than average, often exceeding 5 days.
• Chargeback ratios: likely to be elevated due to impulse purchases and consumer behavior in this space.
• Card approval rates: can be affected by the non-essential nature of the goods.

Key metrics to monitor

Transaction success rates segmented by payment method.

• Chargeback rates with a breakdown between fraud and service-related disputes.
• Average order value to gauge customer purchasing behavior.
• Customer return rates indicating satisfaction and potential fraud issues.

Risk & Compliance

Merchants categorized under this MCC face potential risks related to chargebacks, customer disputes, and compliance issues. PSPs and acquirers maintain a vigilant stance, necessitating that merchants actively manage their operations to mitigate these risks.

Chargebacks & fraud

Common issues include friendly fraud (customers disputing legitimate transactions), non-receipt claims, and product dissatisfaction.

• The risk of card-not-present fraud is heightened due to online sales and digital transactions.
• Effective mitigation tools include fraud detection algorithms, chargeback alerts, and robust transaction monitoring systems.

AML/KYC expectations

Merchants must provide strong customer identity verification (IDV), incorporating document validation and physical address checks.

• Sanctions and PEP (Politically Exposed Person) checks are essential to prevent potential money laundering.
• Manual review triggers include inconsistent purchase patterns, high-frequency transactions, and discrepancies in customer information.

Operational red flags

Lack of transparency regarding the ownership of the business can alarm PSPs and acquirers.

• Unverified or questionable traffic sources may raise concerns about the legitimacy of customer acquisitions.
• Incomplete policies on returns or refunds can lead to higher chargeback rates, prompting scrutiny from payment processors.
• Difficulty in providing clear information about product offerings and pricing can signal potential compliance risks.

Onboarding Checklist

Merchants under the News Dealers and Newsstands MCC 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
• details on product offerings and promotional strategies

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 and transaction limits; any refund processes
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certifications are important for merchants classified under this MCC, as they may face specific legal obligations depending on their location and the nature of their operations. Recognition of these licenses by payment service providers (PSPs) often varies based on the jurisdiction and the target markets for their products.

Operator licenses

Local business licenses — typically required for operating any business, including newsstands, often issued by city or county authorities.

• Sales tax permits — necessary for collecting sales tax on newspaper and magazine sales, varying by state or region.
• Specific vendor permits — some areas require special permits for selling periodicals or street vending, recognized primarily at the municipal level.
• Copyright compliance — while not a traditional license, compliance with copyright laws concerning distributed materials is critical for publishers.

Geo-restrictions

Certain municipalities may impose restrictions on where newsstands can operate, affecting business locations.

• Regional sales tax regulations may apply differently in various jurisdictions, impacting pricing and compliance.
• Local zoning laws could limit business hours or the types of publications that can be sold.

Certifications & audits

No specific industry-standard certifications are generally required, but financial audits may be necessary for larger operators.

• Compliance with local health and safety regulations, often required for physical storefronts.
• Periodic inspections may be mandated by local authorities to ensure adherence to licensing requirements.

Official Definitions & Network Comparisons

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

Explanation:

While the definitions from each network generally encompass similar concepts, nuances such as a focus on primary business activities and location specifics can impact how merchants are classified. For example, some networks are stricter about requiring verification of sales, especially for businesses that may also sell ancillary products. Common reasons for denial may include a lack of documentation proving primary business activities or concerns regarding the mix of products being sold.

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:

If your primary business is selling newspapers or magazines, stick with MCC 5994. Attempting to categorize your business under another MCC code can lead to compliance issues and potential account complications. Always ensure your classification accurately reflects the main focus of your sales.

Best Practices for Merchants

Merchants operating under the MCC 5994 must prioritize risk management and customer trust, as the nature of their business can attract scrutiny. By adhering to the best practices outlined below, merchants can optimize their operations, minimize disputes, and ensure ongoing success in payment acceptance.

Classification & transparency

always use the correct MCC; misclassification can lead to account issues or closure

• ensure your website clearly displays relevant policies, including refunds and subscription terms
• maintain transparent business practices, including honest marketing and clear product descriptions

Fraud & chargeback reduction

integrate 3DS or step-up flows for transactions that show signs of risk, such as high values or unfamiliar IP addresses

• use clear billing descriptors that are easily recognizable to customers to prevent confusion
• implement logging for transaction events to aid in responding to disputes effectively

Payment acceptance optimization

offer multiple payment methods (cards, digital wallets, etc.) to cater to diverse customer preferences

• consider routing transactions based on geographic data to enhance approval rates
• test different PSPs through A/B testing to find the best fit for your transaction types

Operational discipline

establish and monitor key performance indicators (KPIs) like chargeback rates and active customer ratios

• conduct regular compliance audits to ensure adherence to internal and PSP standards
• designate a dedicated team or individual to handle disputes and ensure timely resolution

Payouts & liquidity

set aside adequate buffers for rolling reserves to maintain liquidity in the event of disputes

• automate anti-money laundering (AML) checks for withdrawal requests, particularly for large amounts
• keep an eye on payout patterns and flag any unusual transaction behaviors to prevent fraud

Business Scope & Examples

This MCC includes businesses that are primarily focused on selling newspapers, magazines, and other periodicals. Merchants classified under this category typically provide customers with a variety of printed materials and related products, contributing to the dissemination of information and entertainment.

Models

newsstands and kiosks selling newspapers and magazines

• retail establishments specializing in periodicals
• convenience stores with significant magazine and newspaper offerings
• online platforms selling digital or physical subscriptions to news publications

Borderline cases

Bookstores — while they sell printed materials, they primarily focus on book sales rather than news items, and may have a different MCC.

• Stationery shops — may carry periodicals, but their main focus is on stationery and office supplies, leading to a different classification.

Signals for correct classification

the primary business activity involves selling newspapers and magazines

• the majority of product offerings are periodicals, rather than books or stationery
• sales transactions often include impulse buys of printed materials at physical locations