You and Your Merchant Identification Number
Table of Contents
- What is a merchant identification number?
- How do you get a merchant identification number?
- What can go wrong with a merchant identification number?
- Protecting your merchant ID
- How do I get a merchant identification number?
- Where do I find my merchant ID number?
Every day, banks and card networks process hundreds of millions of payment card transactions. These digital exchanges are the lifeblood of eCommerce—and many brick-and-mortar establishments, too. With so many businesses participating in this payments ecosystem, you might wonder how all of these different entities can tell merchants with similar names apart and route their transactions to the right recipient every time.
The answer is that every merchant has a unique identifier that functions as their home address in the payments world: Their Merchant Identification Number, or MID. What is the significance of your Merchant Identification Number, and what does it actually do for you?
Nobody likes to think of themselves as just another number in a vast impersonal system, but in this increasingly digital world we’re doing business in, numbers are the universal language. Your MID allows you to be recognized and identified by issuers, acquirers, card networks, payment processors, independent sales organizations, and all of the other behind-the-scenes entities who make electronic payments possible.
You might not have to think about it very often, but your MID is a very important piece of data for your business. Without it, you'd have trouble opening new business relationships, receiving payments, and more.
You could say that your MID is analogous to a username or phone number. It’s easy to take it for granted, but if it gets compromised or misused, you could be in for some serious headaches. Sometimes, you might even want more than one.
What is a merchant identification number?
Unlike cash transactions, a credit card payment isn’t a discreet hand-off between a buyer and a seller. There are many different parties involved in even the simplest card transactions. At a minimum, the payment has to bounce from the merchant, to the issuing bank, to the card network, to the acquiring bank before any money can show up in your account.
Your MID tells all of the players in this process where the transaction originated and where the funds ultimately need to go.
It can be easy to get your MID confused with some of the other identifying numbers assigned to your business. You might have multiple merchant accounts for your business, each with a unique ID, but these aren’t the same as a MID. You might also have one or more of the following:
- Terminal Identification Number (TID): these numbers identify the different payment terminals used by your business.
- Gateway Identification Number (GID): this identifies the network used by your payment gateway.
All of these, however, are subordinate to the MID assigned to identify your entire business.
It's possible for a business to have more than one MID. Some very large merchants have completely different storefronts or brands, and for those merchants it might make sense to use separate MIDs to account for the revenue that each channel brings in.
By having individual merchant IDs for each brand, website, or storefront, it becomes much easier for a merchant to track all the of their transaction activity individually. This can help identify issues within each of these channels that could be leading to problems like chargebacks. Separate IDs can be especially helpful if these different parts of the business also have different sets of employees running them, reducing confusion between teams for different brands that might not communicate as much.
For most businesses, however, one merchant ID is enough. Even a merchant who wants to maintain multiple merchant accounts can still use the same ID for all of them.
If you’re not sure what your MID is, you can probably find it on your account statements, or get your payment terminal to pull it up. For most merchants, it will be a 15-digit long code. Just don’t go printing it out on the business cards you hand out—your MID is for the eyes of trusted payment institutions only.
If a fraudsters gains access to your MID, they can potentially use it to impersonate you and steal your payments.
A fraudster with access to a business's merchant ID could potentially open up new accounts in that merchants name and use those accounts for fraudulent transactions. In 2010, the U.S. Federal Trade Commission tracked down a group of fraudsters who had opened up more than 100 new merchant accounts using stolen merchant IDs, and used those accounts to make numerous small charges totaling over $10 million.
How do you get a merchant identification number?
If you’re accepting credit card payments, then you should already have a MID, given to you by your acquiring bank when you started working with them. Payment services like PayPal and Square don’t always assign individual merchants their own MID, however. Instead, transactions get sent to the MID of the payment platform itself, and they then route the money into the correct account.
Merchants are typically issued new IDs whenever they switch from one payment processor to another. However, this process is well-established and usually seamless. It should require any significant effort on the part of the merchant to start receiving payments using the new ID.
If you need additional MIDs because you’re expanding your business, you can contact your acquirer for information on how to obtain them.
What can go wrong with a merchant identification number?
There are two big potential threats to your MID. The first, as mentioned earlier, is fraud. In some ways, an MID is like a Social Security Number. It’s not really a secret in the same way that an account password is, but in the hands of a bad actor, it can be used to steal your identity—and your money. Keep your MID private, and if you suspect that it has been compromised, let your acquirer know immediately.
The other danger is that you can lose the use of your MID, or even have it revoked entirely, if the activity on your account is deemed too risky. For most merchants, the biggest risk factors are fraud and chargebacks. If you exceed the fraud and chargeback thresholds imposed by your bank or payment processor, you might have your funds placed on reserve while they verify that your transactions are legitimate, or they might put a hold on your ability to process new transactions.
The worst case scenario, if you let a chargeback problem become too unmanageable for too long, is that they’ll terminate your MID and stop doing business with you. You might be blacklisted for a period of time and be stuck applying for a new MID with expensive “high risk” payment processing services.
The best way to avoid this scenario is to employ effective strategies for preventing fraud and chargebacks:
- Use AVS and CVV when you process transactions
- Implement effective anti-fraud tools like 3-D Secure
- Use clear merchant descriptors
- Have a generous refund policy and top-notch customer service
- Fight every illegitimate chargeback with compelling evidence
Without a MID, you can’t receive credit card payments—so do everything you can to protect it.
Protecting your merchant ID
A merchant can go a long time without thinking about their MID—or even knowing what it is—but when fraud and chargebacks threaten to take it away, keeping it safe can become a matter of survival. Few eCommerce merchants can afford to go a day without being able to process credit card payments, and high-risk processor fees can cut deeply into profits.
If you’re not sure what to do about a growing fraud or chargeback problem that’s putting your MID at risk, don’t be afraid to seek out expert advice. The right chargeback management firm can help you put together the right strategies for thwarting fraud and winning disputes.
How do I get a merchant identification number?
Where do I find my merchant ID number?