Merchant Identification NumberYour “Your One-of-a-Code” Identification. Why is Your MID Such an Important Identifier?

Merchant Identification Number: What is a MID & Why Does it Matter?

When a customer makes a purchase from your store, you know that the transaction funds will be moved from the cardholder’s bank account to your merchant account. Ever wondered how that happens, though?

Out of all the card-accepting merchants in the world — 11.7 million in the US alone — what ensures that the money will get to you? 

It primarily gets down to one thing: your merchant identification number, or MID. Your unique MID code makes sure that your money gets routed properly and that no funds get lost in transit. In this post, we look at the form and function of this critical component in the transaction reconciliation process.

What is a Merchant Identification Number?

Merchant Identification Number

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A merchant identification number is a unique code provided to merchants by their payment processor. Often abbreviated as MID, this code is transmitted along with cardholder information to involved parties for transaction reconciliation. The MID can help identify a merchant when communicating with their processor and other parties.

What is your merchant ID number? Put simply, MIDs are unique 15-digit alphanumeric codes used to identify your merchant bank account. Similar to an account number for a consumer bank, your MID is a private number. It’s shared strictly between your business and payment processors. 

Your MID is like a forwarding address. When the transaction amount for a payment card sale is removed from the cardholder’s account, the MID guides the funds straight from your acquirer into your account. Without a MID tied to a transaction, the funds would have no destination… and you would receive no payment.

Can I Have Multiple MIDs?

Yes, it’s possible to have multiple merchant IDs under one merchant category code ( MCC), or under multiple different MCCs. Merchant category codes are used to identify your industry, whereas each MID refers to a specific merchant account.

Unlike the typical arrangement, where a merchant processes all transactions through a single MID, multiple merchant accounts allow businesses to separate transactions based on specific criteria. For instance, having additional MIDs may enable you to process different credit card types or international orders separate from other transactions.

Why Would I Need Multiple MIDs?

As we mentioned, the majority of businesses will only need one MID. However, merchants with multiple distinct sales channels or locations often have unique MIDs for different revenue streams.

This is primarily done for accounting reasons. Using individual MIDs for each service type or location can help you analyze the profitability of a given outlet or sales channel, for example. While any business can theoretically sign up for multiple IDs, certain verticals need it more than others. For example::

In each of these cases, having unique MIDs for different parts of the business can simplify sales tracking, financial reporting, and operational efficiency. It can also provide clearer insights into the profitability and performance of each segment.

Do All Merchants Need a Merchant Identification Number?

No, not all merchants need one. Take merchants working with Stripe to process payments, for instance. Stripe are what's called a payment aggregator, meaning that all Stripe customers are effectively sub-merchants under Stripe’s master merchant account. So, instead of each small business getting its own MID, they share Stripe's merchant account (and their merchant ID).

Aggregators make payment processing a lot simpler for small businesses and solo entrepreneurs. Merchants can start accepting payments immediately, without the need to deal with the complexities of conventional payments processing. 

If you're a smaller business or a startup, using one of these services can save you a lot of time. You get to use their systems and support without less cost and hassle. In fact, being under a payment aggregator's account is all that many smaller businesses will ever need. If you want to scale your business down the road, however, then switching to your own MID might be a necessary move.

Locating Your Merchant ID

“Is it possible to look up your merchant ID online,” you ask?

Nope. Merchant IDs are not public information and cannot be found anywhere online. There’s no database or list you can view anywhere on the internet that will have this information.

There are a few other ways to view your MID, however:

#1 |  The 15-digit code is located in the upper right-hand corner of your monthly merchant statement

#2 |  On your credit card terminal, usually on a sticker or label

#3 |  At the credit card receipts, before ‘terminal’

Your MID is a private number shared strictly between your business and payment processors. It’s just like an account number for a consumer bank. So, be sure to keep your MID secure, and never share it publicly.

What Do I Need to Acquire a MID?

When you're ready to acquire an MID, there's some specific information and documentation you'll need to provide. This is necessary for the financial institutions to verify your business and ensure compliance with regulatory standards. 

Here's a breakdown of the key information you'll typically be asked for:

• 1. Taxpayer Identification Number (TIN): This is used for tax purposes and to confirm the legal standing of your business. Your TIN could be your business's Employer Identification Number (EIN) if you're incorporated, or your Social Security Number (SSN) if you're a sole proprietor.
• 2. Names of Principal Owners: You'll need to provide the full names and personal details of all the primary owners or key executives of the business. This often includes anyone with a significant stake in the company or those who have significant management responsibilities.
• 3. Business Legal Name & DBA (Doing Business As): The official legal name of your business as registered in your incorporation documents or business registration, along with any DBA names if you're operating under a different trade name.
• 4. Business Address & Contact Information: The physical location of your business (cannot be a P.O. Box), and your main contact details, such as phone number and email address.
• 5. Bank Account Information: Details of the business bank account where transactions will be deposited and fees will be withdrawn. This includes the bank's name, routing number, and account number.
• 6. Nature of Business: A description of what your business does, the types of products or services you sell, and your business model. This helps the processor understand the risk profile of your business.
• 7. Estimated Sales Volumes: Information on your expected monthly sales volumes and the average transaction size. This helps in setting up the correct processing limits for your account.
• 8. Website URL: For businesses that operate online or have an online sales component, you'll need to provide your website URL. This is so the processor can verify that your website complies with their requirements, such as displaying refund policies and contact information.

Gathering this documentation before you start the application process helps streamline MID acquisition and minimizes delays in the approval process. In other words: preparation is the key to getting set up and accepting payments faster.

Can I Lose My Merchant ID Number?

Yes. The most common reason businesses lose their merchant identification number is excessive chargebacks. It’s important to understand the different short- and long-term actions that can be taken against your account due to chargeback activity.

“The cash is secure…you just can’t have it.”

“Hitting ‘pause’ on your processing privileges.”

“That’s all, folks!”

What is an Invalid Merchant ID Error?

Receiving an invalid merchant ID error code means the cardholder's bank has declined the transaction. Unlike declines caused by issuers, however, an invalid merchant ID message points to a problem between you and your payment processor.

So why does this happen? The most likely explanation is that the connection between your merchant account and the payment gateway has a broken link. There are other reasons you might see an invalid merchant ID error code, though:

How Can I Protect My MID? Our Top 10 Tips to Keep Your Processing Privileges Secure

From fraud to data mishandling, there are a number of hiccups and other problems that can detail merchant processing. Naturally, protecting your business from theft, fraud, and other financial troubles is key to keeping your merchant identification number safe. 

With that in mind, here are ten steps to help keep your MID secure:

Tip #1 |  Boost Your Security Game

Use strong security measures for all payment-related activities. This means making sure all payment information is sent over secure, encrypted connections. Also, keeping your software updated and using firewalls and antivirus programs.

Tip #2 |  Follow PCI-DSS Rules

Sticking to Payment Card Industry Data Security Standard requirements ensures you're doing everything you’re supposed to do in order to keep credit card info safe.

Tip #3 |  Control MID Access

Only let trusted staff who need to handle payments or billing know your MID. Setting up roles in your team helps prevent misuse or accidental sharing.

Tip #4 |  Watch Your Transactions

Keep an eye on your sales records for any odd or unauthorized transactions. Being vigilant will enable you to catch any misuse early and prevent fraud attacks that might jeopardize your MID.

Tip #5 |  Choose Secure Payment Partners

Work with payment gateways and processors known for their top-notch security and fraud protection. Before signing up for service, inquire about any potential provider’s security standards and practices.

Tip #6 |  Teach Your Team

Make sure your employees know how important it is to keep payment processes safe and how to spot and handle security threats. Provide ongoing training regarding security best practices and developing threats.

Tip #7 |  Keep Your Contact Info Updated

Always update your contact details with your merchant service provider to get important account updates fast. Contact info mismatches could lead to your MID and other sensitive information falling into the wrong hands.

Tip #8 |  Use Added Login Security

Add an extra step to your login process, like multi-factor authentication, to make accessing your merchant account and payment systems safer.

Tip #9 |  Update Your Security

Always look for ways to make your security stronger, including keeping up with card network requirements and adapting to new technologies.

Tip #10 |  Get Regular Security Checks

Have experts check your payment systems and security practices now and then. Many businesses recruit white-hat hackers to try and compromise their systems in order to spot weak spots and suggest how to fix them.

Following these steps can make a big difference in keeping your merchant identification number and other payment information safe. At the same time, prioritizing security shows your customers you're serious about protecting their data, which can help build trust.

That said, the above steps can’t resolve every problem you might encounter. Chargebacks are the foremost threat to your MID sustainability, and in many cases, chargebacks are not tied to true criminal activity.

Prevent Chargebacks to Protect Your MID

Chargebacks are the biggest threat to your merchant ID. That means the key to protecting your MID—and by extension, your entire business—is controlling chargebacks.

You have numerous tools at your disposal to prevent chargebacks due to criminal fraud, including:

• Fraud Filters
• Address Verification (AVS)
• CVV Verification
• 3-D Secure
• Geolocation
• Biometric Technology

That makes it sound rather simple. But, the fact is chargeback sources are extremely difficult to identify.

Our research shows that most chargebacks can ultimately be traced to friendly fraud, which relies on passing as a legitimate transaction. If you’re going to stop chargebacks and protect your MID, you’ll need a more comprehensive approach.

Want to ensure your merchant ID against friendly fraud, merchant error, and criminal fraud chargebacks? Continue below to get started today.