If you’re a business accepting card payments, you should already have a merchant identification number. Also known as MID, this number is a unique code linked with your merchant account. Your MID is a significant element of being able to process secure and timely payments to your
merchant account. This article explores everything you, as an online business, need to know about MID’s.
What is a merchant identification number?
A merchant identification number is a distinctive, numerical code that the acquirer assigns to merchants once they successfully open their merchant account. The MID identifies a merchant to their acquirer.
How do I get a Merchant ID Number?
To process card payments and eventually get a MID, you need to apply for a merchant account. As part of your merchant account application, your acquirer will most likely ask you to submit official documentation as part of the DD (Due Diligence) and KYC (Know Your Customer) processes. This documentation will be related to your company structure, taxation, and legal documents, among other details.
Once the merchant successfully undergoes the DD and KYC processes and the agreement is signed by both parties, the acquirer creates the MID. To generate a MID that will efficiently route your payments, your acquirer will also ask you questions such as the projected volume of transactions, your preferred currency, whether you will process one time transactions or recurring payments or if you need to apply
3D Secure 2 etc.
Aside from routing funds, this MID is used to identify you as a merchant during the processing of debit and credit card transactions, adjustments, chargebacks and fees, among others. For each debit or credit card payment, your acquirer will transmit the MID along with the cardholder’s information to all involved parties (i.e. card schemes and issuing banks) that will eventually authorise the payment. Once the payment is approved by the issuing bank, the acquirer gets a “green light” to deposit the funds from the cardholder’s bank account to your merchant account. The timeframe for the transfer of funds varies among merchants and heavily depends on the settlement terms with their acquirer.
Why do I need a Merchant ID?
Every business, either online or offline, that accepts card payments, needs a merchant ID number to identify their specific merchant account in a card transaction and route the funds to it. A merchant ID is sensitive information and should be kept private, similar to one’s bank details.
What is a TID?
TID is the acronym for terminal identification number. A TID is a unique identification number linked with your MID and each of your terminals that process credit card payments. A TID can be used for both card present and card not present (CNP) transactions. In a card present transaction, the TID is assigned to a POS machine, whereas in card not present transactions a TID is linked with a virtual terminal. A merchant with a single MID may use several TID’s under it.
Can I have multiple MID’s?
More often than not, a single merchant account with a MID under it will be more than enough to operate a small or medium-sized enterprise. Remember, a MID can have multiple TID’s grouped under it. Based on your business model and the transactions you will process through your acquirer, the latter will assign you a single merchant ID number or multiple MID’s.
Can I lose my MID?
Technically, you can’t lose your MID. However, if your actions lead to violating your terms of service with your acquirer or payment service provider (for instance due to excessive chargebacks or other potentially fraudulent activity), this could lead to your acquirer freezing or even terminating your merchant account. Essentially, either of these situations means that you will not be able to process card payments with your acquirer, which could be detrimental for an eCommerce merchant, as they would have no other stream of revenue. 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, as well as give you access to analytics and data that can help you optimise your performance and increase your conversions.
emerchantpay offers robust payment and acquiring solutions for online and offline businesses. Reach out to our payment experts to find out how we can help you accept seamless payments that boost your conversions.