9399 Government services

Introduction

• What it is: This MCC encompasses various government-related services that don't fit into specific categories.
• Risk level: Medium — Services may involve significant public funds, contributing to potential scrutiny.
• Acceptance difficulty: Medium — While not overly complex, onboarding may require additional documentation due to public sector involvement.
• Typical business models: municipal service offices; government contractors; public service agencies; local regulatory bodies.
• For merchants: Expect thorough due diligence; moderate MDR rates; potential for reserves based on transaction volumes.
• What PSPs expect: Clear identification of government contracts; validation of business legitimacy; detailed descriptions of services offered.

Payment Insights & Benchmarks

Merchants in this MCC should plan for unique payment dynamics that may differ significantly from standard e-commerce. Acceptance rates can be influenced by various factors, including government regulations, payment method preferences, and the need for additional security measures.

Payment methods

Cards: government-related transactions often face increased scrutiny, leading to varied approval rates.

• E-wallets: an emerging option for convenience, but acceptance may be limited in some areas.
• Bank transfers: widely utilized for larger transactions, requiring robust validation.
• Checks: still relevant, especially for certain governmental fees, but slower and less efficient.
• Digital payment solutions: tend to be less utilized due to regulatory constraints.

Authentication & security

Enhanced due diligence and KYC (Know Your Customer) practices are critical in this sector.

• Strong Customer Authentication (SCA) is frequently mandated, affecting user experience.
• Fraud prevention strategies must address both unauthorized transactions and identity verification challenges.

Benchmarks (indicative, not guaranteed)

MDR: typically higher compared to standard e-commerce due to risk factors.

• Rolling reserves: can be greater than average to mitigate default risks.
• Settlement cycles: often longer (7-14 days), reflecting additional verification processes.
• Chargeback ratios: generally lower due to the nature of services and client relationships.
• Approval rates: variable, potentially lower for card payments relative to e-wallets or bank transfers.

Key metrics to monitor

Transaction approval and decline rates segmented by payment method.

• Chargeback rates specifically categorized by industry and transaction type.
• Average transaction size and volume trends to gauge operational health.
• Customer feedback on payment gateway experiences to enhance user satisfaction.

Risk & Compliance

Merchants under this MCC are closely scrutinized due to elevated financial and reputational risks. PSPs and acquirers typically apply stricter controls, expecting merchants to proactively address fraud, chargebacks, and AML/KYC compliance.

Chargebacks & fraud

High incidence of friendly fraud (“I didn’t authorize this transaction”) and disputes over service not rendered or unsatisfactory service.

• Common abuse patterns include exploiting loopholes in service access and using stolen payment information for government-related fees.
• Mitigation tools include velocity checks, identity verification processes, and transaction monitoring systems to identify suspicious activities.

AML/KYC expectations

Strong customer identity verification (IDV) processes, including government-issued ID checks and proof of residency.

• Sanctions and PEP (Politically Exposed Persons) screening to ensure compliance with financial crime regulations.
• Manual review triggers include unusually large transactions, inconsistent user information, or connections to high-risk jurisdictions.

Operational red flags

Lack of clarity surrounding ownership of services offered, especially in cases where third-party service providers are involved.

• Traffic originating from suspicious locations or unverified affiliates that raise concerns about the legitimacy of service access.
• Absence of clear policies for refunds or service guarantees, which can lead to increased chargeback rates.
• Unexplained discrepancies in transaction volumes or patterns that don’t align with the nature of the services offered.

Onboarding Checklist

Merchants in the Government Services 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 government services
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

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

Product & marketing

demo access or screenshots of the government services platform

• marketing plan and communication strategies
• information on target demographics and service outreach

Technical integration & security

payment architecture overview with supported methods/providers

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

Operations

customer support setup, including hours and contact methods

• SLA for dispute handling and service inquiries
• details on the process for addressing user complaints and feedback
• internal protocols for service delivery and compliance monitoring

Regulation & Licensing

Licensing and certification are critical for merchants in this MCC, as PSPs and acquirers will require proof of compliance before onboarding. Recognition of licenses depends heavily on the merchant’s jurisdiction and the markets they target.

Operator licenses

Local government authority licenses — often required to operate government-related services in specific jurisdictions.

• Federal licensing, where applicable, for services connected to national government functions.
• State or provincial licenses that govern specific services within those regions, varying widely in scope and recognition.
• Some countries may have unique regulatory bodies overseeing operational compliance for public services.

Geo-restrictions

Services may be restricted to specific jurisdictions based on local regulations and governmental policy.

• Certain countries may have strict limitations on foreign-operated government services.
• Regions with high regulatory scrutiny may impose additional compliance burdens or outright bans on certain services.

Certifications & audits

Compliance audits that assess adherence to local laws and regulations.

• PCI DSS compliance for the handling of payment card data when applicable.
• Government-specific compliance certifications, which may vary by service type and region.
• Regular reporting and audits may be expected for transparent operational oversight.

Official Definitions & Network Comparisons

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

Explanation:

The terminology used across networks varies, with phrases like "government services" being consistent but the nuances in classification can impact onboarding. Some networks may demand specific documentation or verification processes to confirm the legitimacy of the services being offered. Common rejection reasons include insufficient proof of service type, non-compliance with geographic regulations, and incomplete application details.

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 services are accurately represented by the correct MCC. If your business activities fall under broader government functions, you should use 9399 only if they genuinely fit that classification, as misclassification can lead to compliance issues and potential account termination.

Best Practices for Merchants

Merchants operating under the Government Services MCC must navigate complex payment landscapes and regulatory scrutiny. Implementing the following best practices will help manage risk, enhance payment acceptance, and foster strong relationships with payment service providers.

Classification & transparency

always use the correct MCC; improper classification can lead to account restrictions or closures

• clearly publish service offerings, fees, and any applicable regulations on your website
• maintain straightforward business models and ensure billing descriptors reflect the services provided

Fraud & chargeback reduction

employ 3DS or step-up authentication for transactions flagged with high-risk attributes (e.g., large amounts, unusual geographies)

• utilize clear and immediate billing descriptors along with responsive customer service to address inquiries promptly
• implement logging of transactions and interactions for a comprehensive record to support dispute resolution efforts

Payment acceptance optimization

provide multiple payment methods (credit cards, direct debit, digital wallets) to accommodate diverse customer preferences

• route transactions based on geography or type of service to ensure optimal processing performance
• test the efficacy of different payment service providers and consider using distinct merchant IDs for various service categories

Operational discipline

define and monitor key performance indicators (KPIs) such as transaction approval rates, decline reasons, and chargeback ratios

• conduct regular compliance audits and ensure internal policies are updated to reflect current regulations
• establish a specific protocol for managing disputes, designating a team member to oversee this area with set response times

Payouts & liquidity

create liquidity buffers to accommodate rolling reserves and any potential settlement delays

• automate anti-money laundering (AML) checks for high-value withdrawals to maintain compliance
• continually assess and mitigate any unusual patterns in payout requests or withdrawal behaviors

Business Scope & Examples

This MCC encompasses a variety of government-related services that do not fall neatly into designated categories. Merchants under this code typically provide services related to public administration, taxpayer support, and other governmental functions that might not be classified under a more specific MCC.

Models

governmental payment processing services

• public transportation ticket sales (municipal)
• city or county permit and license fees
• tax collection services and consulting
• fees for public records and document requests
• local government service fees (e.g., water, sanitation)

Borderline cases

Private fundraising for government projects — entities involved in fundraising for government services may seem similar, but they do not qualify under this MCC if they are not directly government-operated.

• NGO services — nonprofits providing governmental functions or support might get confused with this MCC, but they are typically classified elsewhere unless they are government entities.

Signals for correct classification

services directly provided by a government entity or agency

• payments made for licenses, permits, or regulatory fees
• the primary beneficiary is a public service or government mandate