The acronym “MID” stands for Merchant ID, Merchant Identification Number, or even Merchant Number. It sounds pretty straightforward and simple, but the MID plays a major role in the flow of funds. Not every merchant has an MID and merchants who do have one might not know it.
Knowing your Merchant ID and understanding how it’s used can help you in the long run to keep your business compliant with your payment provider’s terms of service.
Understanding MIDs and How They’re Used
What is a MID?
The Merchant ID number is uniquely assigned to a business upon opening a merchant account. That means MIDs are only given to business who use a merchant account to provide payment processing for customers, not merchants who use 3rd-party processors. If you use Square, PayPal, Stripe, or some other 3rd-party aggregator, then you won’t have an MID.
Is a Merchant ID the same as an account number?
No, the MID is not your account number or your merchant category code. Instead, it is a unique number associated with a business’ merchant account. There are other identification numbers, but none of them should be confused with the MID. You can have multiple merchant accounts that operate under the same MID. Alternatively, you can have multiple merchant accounts with individual MIDs. When there are multiple MIDs, it’s usually because the revenue streams need to remain separated. Unless you operate a multichannel retail store or something similar, you’ll only need one MID.
What are the other ID numbers?
The Merchant Account ID (not to be confused with Merchant ID) is used to identify various accounts that use the same payment gateway. If you operate different businesses under an umbrella corporation, then each business will receive its own unique Merchant Account ID while sharing the same MID. Because the umbrella corporation is what secured the merchant account, it’s what receives the MID. Everything under the umbrella operates with that MID but can be recognized separately by their individual Merchant Account IDs.
The Terminal Identification Number (TID) is another form of identification. This one is based on the equipment used to process transactions. Let’s say your business has 3 Point-of-Sale (POS) terminals for processing payments. Each terminal has its own Terminal ID, so your business would have 3 TIDs under 1 MID.
There’s also the Gateway Identification Number (GIN). This one is assigned to the specific network, or gateway, used to process payments.
All these numbers combine to identify your business every time a debit or credit card transaction is processed to tell the provider who is paying how much money to whom through what network.
Obtaining, Finding, and Using an MID
Where is the MID located; how do I find my Merchant ID?
The MID is assigned to you when you open a merchant account and it’s located on many documents related to your business. The easiest place to find it is on your monthly statement. It should be right along with your business name, address, and other info at the top.
If you want to find it digitally, it’ll be in the online account portal if your merchant account provider gave you access to one. Each portal is different, but the first place you can check is under your account information page on the main menu. This applies to mobile apps as well.
You might also find the MID on your merchant agreement in the attached forms (i.e., not on the contract, itself).
If you can’t find it in any of these places, you can always call your merchant services provider and ask for it directly.
How do I get an MID?
Again, the number is assigned to you when opening a merchant account. You’ll have to go through the process of securing an account and verifying your business before being assigned an MID. Otherwise, it’s an automatic event. If you have a merchant account, then you have the number and should be able to find it using the methods above. If you don’t have a merchant account, then you don’t have a Merchant ID.
What should I do with my Merchant ID?
Keep it safe and never share it. We know it shows up seemingly everywhere, but it’s a very sensitive ID number that should be protected, just like your bank account numbers or social security number.
Your Merchant ID should be on hand in case you need to refer to it. It can be used to dispute transactions, verify your identity, and more.
If you’ve opened multiple merchant accounts, it’s important for accounting purposes to verify that the correct transactions are running through the correct MID. Merchant IDs are a great way to stay organized, financially.
Can the Merchant Identification Number be lost or canceled?
If your MID gets into the wrong hands, it could mean serious trouble for your online business. If your number gets flagged for fraud, it’s more trouble for you than for the fraudsters that caused it. The merchant service provider (MSP) or acquirer can freeze transactions, preventing you from processing payments. Your account can even be terminated, which in turn would cancel your MID number. Fraud is the main reason you should keep your MID protected, but it’s not the only reason your account could be canceled.
Excessive chargebacks are the most common reason for canceled MIDs. Chargebacks are a normal part of financial operations for e-commerce businesses of all kinds. High-risk businesses tend to suffer from higher chargeback ratios. If that ratio is too high, a processor might withhold transactions funds as a way temporary chargeback reserve.
Holds are generally temporary but if chargebacks continue, then your MID might become frozen. In this case, you won’t be able to accept any card payments until the freeze is lifted. A freeze is different than a hold in that the credit card processor only holds on to some funds but still allows your payment gateway to process credit card payments. A freeze stops your gateway from processing entirely.
Termination is the final straw. If chargebacks continue and the acquiring bank or processor is continually covering for you financially, then they will see you has a risk and cancel your Merchant ID and account.
Ways to Protect Your MID and Merchant Account
Know the risk associated with your industry.
You should understand the risk level associated with your industry, first. A good MSP will provide you with some level of fraud and chargeback protection, but not always. Standard merchant accounts don’t necessary include these security measures. Instead, a good high-risk MSP will.
If your industry is associated with a higher-than-normal level of risk, it’s a good idea to apply for a high-risk merchant account. Online businesses that sell cannabis, THC, advice, tickets, and a slew of other products of risk are all categorized as high-risk businesses. Know the risk of your industry and act accordingly. Even if an industry is trending and on the rise, acquirers will still view it as a risk to their own financial standing.
Use 3rd-party protective services and clear refund policies.
There are plenty of 3rd-party plugins and services you can attach to your existing payment gateway that won’t disrupt the user’s checkout experience.
CVV, AVS, and 3D Secure can be added pain-free to your site. These help verify customer identity to prevent fraud as well as chargebacks.
Your refund policy is a great tool to prevent chargebacks. If you’ve been suffering from an increase in chargebacks, then review your refund policy. Make it friendlier to your customers and easily accessible from anywhere on your site. If you have an increase in chargebacks, then you’re paying much more than a typical refund because of the associated fees. It’s better to lighten up your refund terms so you can process it directly instead of allowing chargebacks to continue happening.
Ensure Your Merchant ID Is Safe Against Chargebacks and Fraud with DirectPayNet
Opening a merchant account through DirectPayNet grants you access to incomparable security. We provide chargeback monitoring services, fraud protection, and more to keep your MID safe and your business operating smoothly.