What is a Merchant ID Number?

Quick Hits: 

  • A merchant ID is a 15-digit code that identifies the merchant requesting payment throughout the payment process. 
  • While merchant IDs are not publicly available, merchants can find their merchant IDs on their monthly merchant statement, credit card terminal, or credit card transaction receipt. 
  • Without proper fraud prevention measures, merchant IDs can be revoked which removes the merchant's ability to receive payments altogether.  

What is a Merchant ID Number? 

A merchant ID is an identifying number that enables payments for businesses. A merchant ID helps the payment processor identify the merchant to send money to once the payment has been processed. Without a merchant ID, merchants cannot receive payments, so ensuring that these IDs are accurate and safe throughout the payment process is important.  

Merchant IDs are shared with service providers during the payment process to connect payments to the right merchant. Merchant IDs are not used by every business, only businesses that have merchant accounts. If your business uses a third-party payment processor, like Paypal or Square, you will likely not have a merchant account to worry about.  

Most merchants will only have one Merchant ID, since multiple payment terminals can be organized under one MID. Multiple merchant accounts can even be organized under one MID, so it’s very rare to need more than one MID. However, some merchants use multiple MIDs to organize different revenue streams for tracking purposes.

How to Find Your MID Number

Because Merchant IDs are incredibly important, they are kept secure and aren't searchable online. However, they should not be difficult to find if you have access to your payment documentation. Check your monthly merchant statement, credit card terminal, or credit card transaction receipt to find the 15-digit Merchant ID code. 

If you don’t have a merchant ID, but need one, you’ll acquire a MID when you sign up with an acquiring bank or merchant services provider. Signing on with a credit card processing company and obtaining a merchant ID can be a tedious process, but many merchants find it worthwhile.  

The most important thing to understand is that without a merchant ID, you cannot receive payments. Additionally, if not utilized properly, merchant ID numbers can be revoked, taking away your ability to receive money. Read on better understand how merchant IDs work and how to protect your merchant ID.

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How Merchant IDs Work 

A business will receive a MID when they open a merchant account with a bank or payment processor. The MID will then be used to transfer payments safely to the right account when a sale is made. MIDs are used every time a sale is made to direct the funds to the right account. A MID functions similarly to a bank account number, except it identifies accounts for merchants instead of bank accounts for individual people.  

To better understand how MIDs are used, let's look at what happens behind the scenes when a customer makes a purchase from a merchant: 

  • A customer initiates a sale and swipes their credit card.

  • The transaction information is immediately sent to the merchant account provider, who then passes the information to the acquiring bank.

  • The acquiring bank then requests information from the cardholder’s bank, ensuring there are funds to complete the purchase.

  • If the transaction is approved, the approval is sent back to the acquiring bank who pays the merchant account provider, who pays the merchant.  

If your eyes glazed over reading that, don’t worry. There are many different parties involved in a transaction, and the MID is a part of the system created to ensure that they all communicate with each other effortlessly.  

Specifically, MIDs come into play when the merchant account provider is communicating with the acquiring bank or the merchant. The MID is used by the merchant account provider to identify which business is requesting payment. Without a MID, the payment could easily get lost in one of the many steps before the money ends up in the merchant's account. 

What is a Payment Service Provider

 

How to Protect your MID Number

Merchant IDs are incredibly important to the payments process, yet they can be revoked. If you don’t want your merchant account provider to freeze your payments, or stop them altogether, it’s important to keep your MID out of the wrong hands and protect your merchant account. 

Merchant accounts are most often revoked because of excessive chargebacks. If your chargeback ratio is over the limit, your merchant ID can be suspended or revoked entirely, preventing your business from accepting payments altogether.  

You can prevent friendly fraud and chargebacks by utilizing a robust fraud prevention platform and improving customer satisfaction. If you’re interested in a world-class fraud prevention platform, TokenEx recommends Kount, an industry-leading AI-driven fraud protection platform that can reduce fraudulent chargebacks up to 99%.  

If you’re interested in securing your payments and reducing the cost of fraud, check out the joint Kount and TokenEx fraud solution:  

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