Merchant ID(MID): Everything You Need to Know
Do you know that being a business owner, what will be the most important thing for you and your business? It’s a merchant ID or MID. It is with the help of a merchant ID that the funds from a transaction make it from your cardholder’s bank to your merchant account. But what exactly is a merchant ID, and how does the money involved in transactions always end up in the right place? Read on to find out.
What is a Merchant Identification Number?
A merchant identity number or MIN is a distinctive, numerical code provided to merchants by their payment processor once they successfully open a merchant account. Your MID needs to be a unique combination of numbers and letters because this uniqueness will ensure that the credits and debits made to your merchant account are accurate. It is because of MID that transactions are being able to process securely to your merchant account. The unique code in MID is transmitted along with cardholder information to involved parties for transaction reconciliation.
The MID can help identify a merchant during the processing of debit and credit card transactions, adjustments, chargebacks, and fees, among others. It is highly unlikely that a business accepting card payments will have no MID as all merchants receive a MID when they open a merchant account with an acquiring bank.
If your Merchant Identification Number (mid) lands in the hands of the wrong people, it can be used to run illegitimate transactions. So, always make sure that no unknown person gets hold of your MID. Do everything you can to keep your merchant ID safe and secure.
How to Get a Merchant ID Number?
The first step towards getting your merchant ID number is applying for a merchant account. But before that, you need to verify the authenticity of your business. For that, you will need the following documents:
- Taxpayer Identification Number
- Documents stating that you pay taxes
- Names of the principal owners
- Other legal documents
In some cases, ISOs or Independent Sales Organizations act as a bridge between the merchant and acquirer. They can help merchants get a MID acquisition.
Once you have successfully applied for MID, the acquirer will review your application under a process called underwriting. You will be presented with the proposed terms and conditions. To generate a MID that will efficiently route your payments, your acquirer will also ask you few questions like:
- What is the projected volume of transactions?
- Which is your preferred currency?
- Will you process one-time transactions or recurring payments?
- Do you need to apply for an authentication protocol like 3D Secure 2?
After that, MID will be shared with you, and you can begin processing credit and debit card transactions.
What is the Need for a Merchant ID?
Every business online or offline that accepts card payments needs a merchant account and merchant ID number to identify their specific merchant account in a card transaction and route the funds to it. Suppose you run a business and need an account where your business’s funds will be deposited. A merchant account will be that account. Using it, you will receive payments from your customers for the goods or services you sell. And if you have a merchant account, you’ll definitely need a MID. A merchant ID is sensitive information and should be kept private, similar to one’s bank details.
How to Track Merchant ID?
Business owners need their MID for a variety of different things. As a business owner, you would likely need to put in your MID a couple of times in different platforms such as your CRM or order management system, gateway, and chargeback management technology.
As MIDs are usually unique strings of numbers and/or letters, it can be difficult to remember them. You’ll probably need to search for your MID when it comes time to use it. But instead of looking it up at the last moment, it is always better to know your MID number in advance to avoid last-minute chaos.
Different places where you can look up your MID are:
VAR Sheet: When the processor approved your merchant account application, you must have received a VAR or value-added reseller sheet (sometimes also called a tear sheet or parameter sheet.) Along with other account details, your VAR sheet will have your MID on it.
Merchant Account Agreement: A merchant account agreement typically contains the MID.
Merchant Account Statements: Your monthly merchant account statements will have MID printed on them.
Online Account Portal: If your acquirer has an online account portal, your MID is probably included with other account information.
Can Merchants Lose their MID?
Technically, merchants cannot lose their MID. However, suppose their actions violate the terms of service with the acquirer or payment service provider. In that case, they can lose their ability to process payments, and acquirers may freeze or even terminate their merchant account. As a result, their merchant account will be closed, and its identification number will eventually cease to exist.
There are several reasons merchants may lose their ability to process payments, including money laundering, selling prohibited items, excessive chargebacks, or other potentially fraudulent activity.
The key to protecting your merchant account and your MID is limiting chargebacks and ensuring your payments are secure and fraud-proof. Your payment service provider should provide you with numerous tools to prevent chargebacks due to criminal fraud and give you access to analytics and data that can help you optimize your performance and increase your conversions. If you don’t have access to these tools, contact your payment service provider.