What Is A Merchant ID?

Some credit card industry terms can seem innocuous or self-evident but are actually quite specific to how payment processing works. One such term is the merchant ID, which is often abbreviated as MID. It is also sometimes just called a merchant number.

Not every merchant who accepts credit cards has an MID, but for those who do, the MID plays a key part in how money is transferred from the customer to the merchant.

Does your business have an MID? If so, do you know how to find it? How does the MID fit into the grand scheme of credit card processing? Read on to find out.

Know Your Terms: Merchant Identification Number (MID)

The MID is a unique number used to identify your business for credit card payment processing. Think of it as an account number that is shared among several service providers when transferring payment from the customer’s account to your merchant account.

You will have an MID only if you have a merchant account. If you use third-party processors such as Square, Stripe, or PayPal, you won’t have an MID.

How The Merchant ID Is Used To Transfer Funds

To see how the MID works, first, let us look at a very simplified credit card payment process flow:

• The customer presents a credit card, and you send the information electronically to your merchant account provider.
• Your merchant account provider passes this information–sometimes through multiple tiers of businesses–to the acquirer.
• The acquirer passes the information to the issuer.
• The issuer checks to make sure the customer has sufficient credit, approves payment, and sends the approval to the acquirer.
• The acquirer pays–often through multiple tiers of businesses–your merchant account provider.
• Your merchant account provider pays you.

Your MID comes into play when the merchant account provider passes the payment request to the acquirer and then when the payment is passed to you. The credit card processing industry often subcontracts a lot of work, so your merchant account provider might be a subcontractor working within several layers of other businesses. The credit card payment request must move through all these layers before it gets to the acquirer. Only the acquirer can request payment from the issuer (a.k.a. the customer’s bank). Your MID is the account number that identifies your specific business as the payment request moves through third-parties to the acquirer and then back to you. In other words, you can’t get paid without the MID.

Wondering whether the MID is used between the acquirer and the issuer as well? We dug through several guidelines from Visa, Mastercard, and Discover. We couldn’t find an explicit requirement for the MID. The rules only generally speak of the type of information that must be passed between the acquirer and the issuer in order to transfer the money. While a specific format for the MID might still be buried in technical specs not available to the public, it seems that Visa, Mastercard, etc. do not require a standard format for the MID.

Can A Merchant Have More Than One MID?

When setting up a merchant account for a business, Visa (Rule 5.2.1.13), Mastercard (Rule 5.7.1), Discover, and American Express all require your business’s industry to be identified through a code called the Merchant Category Code (MCC). Each merchant account can have only one MCC, and the MCC can affect your processing rate.

Most merchants have only one main line of business, so using one MCC to identify the business is easy. Some merchants, however, have multiple lines of businesses. For instance, hotels, amusement parks, or even big furniture stores (think IKEA) may have restaurant businesses as well. The restaurant credit card processing rate can differ from the hotel, amusement park, or furniture rates. So, to get the best processing rates, these businesses might have multiple merchant accounts with multiple MIDs.

Having multiple MIDs is unusual, however, so if you are a small business owner and see multiple similar terms on your statement, your payment processing software, or even your contract, these are probably not extra MIDs.

Don’t Confuse Your MID With Other Similar Terms

Sometimes, merchants can inadvertently confuse the MID with other similar terms. For instance, if a merchant has several registers at a store, each register can be identified through a terminal ID. Other merchants have an online business so, in addition to the MID, they have a gateway ID for the online credit card processing. These IDs are not the same as the MID, and they are not used in the same way. The terminal ID or the gateway ID might be used to troubleshoot hardware or software issues, but they are not used to transfer money from your customer to you.

Do All Businesses Need A Merchant ID?

Since the MID is a shared account number used by your merchant account provider, your acquirer, and any service providers in between, you won’t have an MID if you don’t have a merchant account. What is more, if you ever change merchant account providers, you will receive a new MID.

In the credit card processing world, there are hybrid entities called third-party processors/aggregators. Third-party processors use a slightly different business model. They have one big merchant account under their name, so you don’t get an individual account under just your business’s name. This is why you don’t get an individual MID.

When these third-party processors need to identify a business, they issue their own account numbers. These account numbers are for internal use only, so there’s no need for the kind of uniformity that would make an ID easily sharable. Square, for instance, uses an email address to identify its merchants, while PayPal has its own account number system (which they also call a merchant ID). Stripe and Shopify Payments also have their own internal schemes on how to assign account numbers.

Why You Should Know Your Merchant ID Number

As mentioned above, your MID is meant to be shared between multiple links in the payment processing chain. Without this number, if you contact one of these businesses for help, they cannot access your file and point you to the correct department or entity.

For instance, your merchant account provider might be an independent contractor who works with a bank acquirer to set up your account. If you have issues with chargebacks, you might have to contact the acquirer for customer support. Under those circumstances, you must know your MID so that the customer support personnel can find your file and help you with your issue.

How To Look Up Your Merchant ID Number

Looking up your MID is fairly easy. Here are some tips for finding your MID:

• The MID is usually located on your monthly statement. Typically, you can find your MID along with other identification information, such as your business name, your business address, business phone number, etc.
• If you have an online portal where you can see your credit card processing account, then you should be able to find your MID online. Look under the main menu and go to your account information page, and it should be listed there.
• If you have an online app through a tablet or phone, you should be able to find your MID through the app as well. Simply follow the same procedure as the portal above.
• Lastly, you might be able to find your MID on your processing/merchant agreement. This is the contract you signed to set up credit card processing in general. You are more likely to find your MID in the attachments/application forms instead of in the contract itself.

As already mentioned above, if you have a third-party processor, you won’t have an MID. These companies use other ways to identify you. Sometimes, it will be your email address, and sometimes it is an account number similar to an actual MID. Be careful and not confuse these with the actual MIDs.

What Should You Do With Your Merchant ID Number?

The MID is an account number shared between various credit card processing entities to help identify your business, so credit card payments can be moved from your customer’s account to your account. It is a fairly important number that you might have to refer to frequently, so we recommend that you keep it in a safe but easily accessible place, with your other financial and legal documents.

Unauthorized personnel should not have this number because it deals with money transfer. For those authorized to have access, they should know how and where to find the number quickly, so that they can give the MID to customer support in case payment issues arise.

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