The Merchant identification number (MID) is not just a code. It’s crucial for identifying merchants in the payment ecosystem and affects nearly all aspects of their transactions and financial activity. Linked to a merchant account, the MID is pivotal in facilitating secure and seamless payment transactions.
The GME report says that the B2C eCommerce revenue is projected to USD 6.43 trillion by 2026. Dividing the annual figure by 365 days yields an estimated daily transaction volume of approximately €2.04 billion. This highlights the high transaction volume and shows how the MID ensures each transaction is separate during payment processing to a merchant's account.
In this article, we’ll explore MID ownership for businesses and how merchants can get it. Let's get into it.
What is a Merchant identification number (MID)?
A MID is a unique code that a payment service provider (PSP) or acquirer assigns to a merchant as a part of their merchant agreement. A Merchant ID verifies the business and enables the transfer of funds from customer transactions to the merchant's bank account. The 15-digit code is also known as an Acquirer merchant ID. It is essential for facilitating the processing of credit and debit card transactions. A MID can also be used for other payment methods, such as bank transfers, eWallets and other alternative payment options. To acquire a MID, a merchant must meet the requirements set by a PSP or Acquirer. Upon successfully opening a merchant account, they are assigned a unique MID code. This code becomes a critical identifier, linking your business with the Acquirer and facilitating seamless transaction processing.If you are a merchant that accepts card payments, chances are you may already have a MID, except in cases where a business uses the services of a Payment facilitator (PF). The PF would have a MID and issue unique IDs to businesses they work with for payment settlement into their account.
Furthermore, it is advisable to treat your MID with the same level of confidentiality as your bank account details, as safeguarding sensitive information can play a vital role in the security and integrity of your payment operations.
Some merchants often confuse their MID with Terminal ID. While these two play a crucial role in settling transactions from your customers to your account, they differ. Up next, we look at the relation between both.
What is the relationship between a Terminal ID and MID?
A Terminal identification number (TID) is a unique code assigned to a payment terminal that works in conjunction with the merchant identification number (MID). The MID is a unique code assigned to payment institutions that permits them to settle transactions into a merchant account.
TIDs are essential for processing both Card present (CP) and Card not present (CNP) payment transactions. Additionally, a single MID can support multiple TIDs, enabling a merchant to operate multiple payment terminals under one Merchant ID.
The TID is public information and can typically be found on transaction receipts, while the MID is not and is usually private. It may be included in the documentation agreements, account statements or online account dashboards. However, the exact location of these codes may vary based on the payment gateway or processor used by a merchant.
Both the MID and TID are crucial for identifying and tracking transactions processed through a merchant account, ensuring accurate recording of payment data and settlement.
How does a Merchant ID number work?
The Merchant identification number (MID) is crucial for ensuring that funds from customer transactions are directed to the correct destination. Just as a phone number directs a call to the proper recipient, MIDs help PSP to accurately settle funds from a customer's payment in a merchant account.
This unique identifier accompanies the transaction data throughout the process, facilitating communication between key stakeholders such as the merchant acquirer, card issuer and payment processor during a transaction. By enabling clear communication and verification among all parties involved, the MID plays a vital role in the seamless processing of payments.
Can businesses have multiple MIDs?
Typically, a single Merchant ID is sufficient for small to medium-sized enterprises, allowing them to manage their payment processing efficiently. A single MID can accommodate multiple Terminal IDs grouped under it. Depending on your business model and the types of transactions processed through your acquirer, you may be assigned one MID or in some cases, multiple MIDs.
While it's uncommon for a business to have more than one MID, there are exceptions. For instance, a business operating a hotel and a restaurant may benefit from separate MIDs for each establishment, enabling more precise transaction tracking, accounting and better financial management. Similarly, an eCommerce merchant managing several websites that offer different services or products under one entity might require multiple MIDs to further streamline their operations.
Why do merchants need a MID?
Every business operating online or offline that accepts CP or CNP payments requires a merchant account to ensure smooth transaction processing. Although merchants may have limited interaction with their Merchant ID, it plays a vital role in internal reconciliation, mainly when a merchant operates with multiple Terminal IDs.MIDs are primarily used by card processors and acquirers to track transactions and provide the necessary support. For example, when a merchant completes a sale and needs to receive funds, the MID is vital in identifying them and facilitating the successful transfer of funds to their account.
Without the MID, these entities would struggle to assist the merchant or provide essential transaction details. More importantly, without a Merchant ID, funds from customer payments would not reach the merchant's designated bank account. The MID and associated bank account information ensure that transaction funds are appropriately routed to the merchant's account.
How to get a Merchant ID for your business?
The first step is to apply for a merchant account with an acquirer to obtain a merchant ID number, which is necessary for processing payments. During the application process, your acquirer will request official documentation as part of the Due diligence (DD) and Know your customer (KYC) procedures.
These documents typically pertain to a merchant's business structure, tax information and legal documentation. Once the merchant completes the DD and KYC processes and both parties sign an agreement, the acquirer generates the MID.
When generating your merchant identification number, the acquirer will inquire about various factors to ensure efficient payment routing. These may include
:- Projected transaction volume
- Preferred currency
- Payment type (such as one-time or recurring)
- The need for additional security measures like 3D Secure 2.0 (3DS2)
Furthermore, the process becomes simpler for businesses that qualify for a second MID. The merchant needs to answer some questions about your business type when adding a new website or business segment without repeating the entire process and providing all the documentation again. This can save time and effort, making the process more efficient.
What are the benefits of a Merchant ID number?
The Merchant identification number (MID) has several benefits for merchants and payment processors. Let's take a look at them below.
Streamlines transaction processingMerchant ID codes ensure that payments are accurately routed to the correct merchant account, facilitating smooth and efficient transaction processing. With so many transactions occurring for online and offline businesses, it can help providers identify the merchant during transactions and ensure that funds are correctly settled.
Transaction tracking and reconciliation
MIDs can make it easier and more effective for payment providers to track transactions across different payment methods. This ensures that the transactions match up accurately when the retailer compares their bank statements with their internal records. This streamlined tracking and reconciliation process helps maintain precise financial reporting and reduces the likelihood of errors or discrepancies.
Improves security
While there are many security measures in payments, a Merchant ID number is one of the many ways payment providers can enhance security. It can help them to monitor, detect and prevent unusual or potentially fraudulent activity efficiently.
For example, based on the fraud detection rules set, if a merchant's account shows an unusual transaction spike from a specific region, the processor can quickly identify and address potential fraud. This approach can also aid in managing and mitigating risks associated with card transactions by linking each transaction to a specific merchant account, ensuring that discrepancies can be promptly investigated, identified and resolved.
Merchant support
With a unique MID, payment processors can offer tailored support for merchants and quickly resolve issues by identifying the merchant's account. It can also ensure continuity of customer service experience for merchants with payment providers by linking support provided or needed directly to the merchant's specific MID.
Where can merchants find their MID number?
Much like a personal bank account number, Merchant IDs are not publicly available information for security reasons. However, locating it is usually straightforward. It can be commonly found in documentation such as merchant agreements, account statements or the merchant's online account dashboard provided by the payment processor. It is typically a 15-digit numeric code in the upper right corner.
Furthermore, if you are still unable to locate it, contacting your payment provider or checking your bank statement for transactions linked to your merchant account can also help. Just be aware that the number on the statement might be a partial MID, so it is best to confirm with your provider if you need clarification.
Can a merchant lose their MID number?
While your MID code cannot be lost, violations of the terms of service with your acquirer or payment service provider (PSP)—such as excessive chargebacks or suspected fraudulent activity—can lead to your merchant account being frozen or even terminated.
Chargebacks occur when a customer requests a reversal of funds. Excessive chargebacks may indicate that customers are not receiving the advertised value or that fraudulent purchases were made using a stolen card.
Hence, conducting business under the agreed terms with your payment provider is advisable. Minimising chargebacks and implementing robust security measures are critical to protecting your account and safeguarding MID. These steps are crucial for maintaining the integrity of your account and ensuring your business is protected against fraud.
How emerchantpay can help you?
With over 20 years of helping our partners succeed globally, emerchantpay is a PCI level 1 compliant PSP and acquirer with over 20 years of experience. From merchant accounts to payment terminals and more, we are uniquely positioned to help you navigate the complex world of payments.
Our global payments solution is available through a simple integration and offers a diverse range of features, global and local payment methods, advanced fraud management and performance optimisation.
Furthermore, we provide merchants who partner with us with a dedicated Account Manager and Risk Analyst. Our experts will assist in addressing risks and concerns about your transactions and payment performance. Come partner with us and book a call with our payment experts today!