Merchant identification number (MID)
What is a merchant identification number?
A merchant identification number (MID), also known as a merchant ID number, is a unique set of characters that identifies the business to a payment processing system. The MID is typically issued by an acquiring bank and serves as an address for the business, indicating where payments should be received.
Regardless of their field of activity, every merchant needs a merchant account to legally accept payments from customers. When opening a merchant account, each company is assigned a unique MID, which identifies their business bank account among thousands of others.
How merchant identification number works
The merchant identification number ensures that the money is sent to the correct merchant account during processing. When a transaction is processed, the merchant ID number is shared with all parties involved, along with payment information, for verification and payment routing. After the issuing bank confirms the payment, the funds will be transferred to your merchant account. Without a merchant identification number, the money will have no destination, and the payment system will not be able to process the payment correctly.
How to get a merchant identification number?
If you're set on obtaining a merchant identification number, it's essential to understand the typical process, which includes the following steps:
- Choose a payment processor or acquiring bank: To obtain a MID, you will need to partner with a payment processor or acquiring bank that offers merchant services. It's essential to select a reputable and secure provider.
- Provide documentation: The payment processor will require documentation such as your business license, taxpayer identification number (TIN), due diligence, KYC (Know Your Customer), bank account information, and other business details to verify your identity and ensure your eligibility for a merchant account. The specific documents required may vary depending on the acquirer you choose.
- Undergo a credit check: The payment processor may also run a credit check to evaluate your financial stability and creditworthiness.
- Set up your payment gateway: Once you've been approved for a merchant account, you'll need to set up your payment gateway to start processing transactions. Your payment processor will guide you through this process.
- Test your setup: Before accepting payments, it's crucial to test your setup and ensure that everything is working correctly. This step will help you identify any issues or errors before they affect your customers' payment experience.
Once your company has been verified and assigned a merchant ID number, you will be able to receive funds seamlessly into your merchant account.
Please note that any business that accepts online card payments and owns a merchant account automatically receives a merchant ID number. However, if you’re using a third-party payment processor like a payment aggregator to process your payments, you will probably not be provided with a unique MID as, in most cases, they use their own merchant accounts to process your transactions.
Can I have multiple merchant IDs?
Short answer: it is possible to have multiple merchant identification numbers. While a single merchant ID number is enough to cover most business needs, some companies need to diversify their offering. For example, if you need a POS terminal, using the TID, another unique number that identifies the payment acceptance device, is a great solution. Moreover, if you have several POS terminals, several TIDs can be easily grouped under one merchant ID number.
But who really needs multiple merchant IDs? Merchants who open several MIDs typically do omnichannel sales. These businesses include restaurants, hotels, chain stores, and others. It’s much more convenient to have a separate merchant identification number for each source of income than to collect everything under one roof.
Having several merchant ID numbers is not only a great opportunity to conveniently track income but also a smart way to diversify risks. For example, if one of your merchant accounts is frozen for some reason, you will not lose everything at once.
Where to find your merchant ID number
Your merchant identification number is confidential information that is not publicly available. It is only shared between your business, the payment processor, and the banks involved in processing transactions. However, there are a few instances where you may need to reference your merchant ID number, including:
- The 15-digit code located in the upper right corner of your monthly statement from the payment processor.
- When transferring funds from your merchant account to a bank account, your merchant ID may appear on the bank statement.
- Your merchant ID may be displayed on a payment terminal but not alongside the terminal ID.
- Your merchant ID can be found in your agreement with the payment processor or acquirer.
Is it possible to lose my merchant ID number?
There is no way to be 100% sure that your merchant ID number won’t be revoked. This can happen for various reasons, but the result will be the same: you can no longer access your merchant identification number. The most common reason for the MID suspension is many chargebacks, which puts your business in a high-risk category. Additionally, a merchant ID can be revoked if suspicious or fraudulent activities are detected on it.
Here are a few tips to help minimise the risk of losing your merchant identification number:
- Implement 3D Secure
- Request a CVV/CVC code with every transaction
- Use two-factor verification
If you need a qualified assistance in obtaining a merchant identification number and setting up acceptance of various payment methods, we at Corefy will be happy to help. Get in touch with us to find out more.
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