The payment processing system is complex. The amount of engineering ingenuity behind seemingly instantaneous transactions is built on an impressive number of mechanisms controlling them. Not only do these mechanisms need to be efficient and effective, but they also need to be secure and confidential.
Part of that ingenuity boils down to the accuracy in which transactions, payments, refunds, and chargebacks are routed between merchants, customers, issuing banks, and acquiring banks — and a crucial part of that system is built on the specificity of merchant ids.
By attaching specific information to merchants, the payment ecosystem can reliably deliver funds to the right businesses.
What is a merchant ID?
A merchant ID (or MID) is a unique identification number attached to a business that tells the payment processing systems involved in a transaction where to send which funds.
You can think of it as an address for your business. If you don’t have a merchant ID, the networks involved won’t know where to send your money.
Merchant IDs are as important as bank accounts and should be treated as such. You open yourself up to vulnerabilities if you widely share this number, so don’t do it unless you absolutely have to.
How to create a merchant ID for your business
This involves a business verification process of sorts. You’ll need a tax number, information on business ownership, and more.
Getting a merchant ID can seem a bit overwhelming, but it’s really not that bad! And once you get your merchant ID, it’s yours for as long as you work with your credit card processing company — assuming you don’t get flagged for excessive chargebacks.
Chargebacks are a normal part of any business (and even more so in retail and other consumer businesses), but an abnormally high rate of chargebacks is usually a sign of a business taking advantage of consumers, which is why you can lose your right to transact if you consistently receive a high number of chargebacks.
Your MSP or acquiring bank can also freeze your account or funds depending on your transaction history. This can be pretty damning — essentially disabling your ability to do the one thing that makes your business money: accepting transactions!
Chargebacks are a whole world and topic in itself, but there are a lot of ways to prevent chargebacks, including:
- Geolocation verification
- Address verification service (AVS)
- CVV Verification
- 3D secure (especially the latest version released in 2018)
- A designated chargeback representative working for your business (we provide chargeback assistance for free for all of our clients)
And if you switch due to bad service or for any other reason besides getting flagged, you’ll have to get a new ID from your new processor. That’s a big move and shouldn’t be taken lightly, but if you’re working with an MSP who is never available, always surprising you with fees, and generally frustrating, you should definitely consider switching providers.
Where to find your existing merchant ID
Merchant IDs are not public information and cannot be searched as such. So if you’re not involved with the business you’re trying to find, there’s no merchant ID number lookup system you can take advantage of.
Again, these numbers are private and used for routing money, sort of like a bank account. You don’t want these numbers to get released publicly.
MIDs are typically 15 numbers long unless your processor does things differently, and you can find them a few different ways:
- On your merchant statement - Check the top right of your merchant statement from your MSP. If you don’t see a 15-digit number that looks like it, get a hold of your merchant services provider or processor and ask them.
- On your terminal - Sometimes MSPs or processors will put the ID on your terminal. Check the sides and bottoms for some indicator.
- On your bank statement - Your statement should have some version of your MID (sometimes an abbreviated version) where the credits and debits from our processors are. These typically start with BTOT or MTOT.
- By calling your merchant services provider - In the end, if you’re having a hard time finding the number, you can call the person who helped set you up with it!
- Through Google Pay - Go to settings and then your public merchant profile. You can find a complete walkthrough here.
- Through PayPal - Just go to your profile and then you can find your ID under “My Business Info”.
- Through Square - Square takes care of this for you and does not provide merchants with a specific ID. Typically smaller or “starter businesses” like Google Pay, PayPal, and Square seem more convenient but often end up being more expensive in the long run with higher transaction fees.
If you run a successful business and have been for a while and/or have multiple locations, you should definitely have your own merchant ID and work with an official merchant services provider.
They’ll be able to equip your business with the right fee structures and systems to save your business money while providing your customers with a better experience.
Other types of IDs you should know about
MIDs aren’t the only types of IDs found in the payment processing world. Again, these IDs work like a hierarchy of specificity for the system itself.
By including network and terminal IDs, a system can determine the business, the specific branch of a business, the terminal, and the network of a specific transaction.
- TIDs - IDs of a specific terminal.
- GIDs - Specific network IDs for merchants.
MIDs, TIDs, and GIDs are all the IDs you need to keep track of, we promise!
That should be everything you need to know about merchant identification numbers. They’re important to know about, but once you have one you shouldn’t have to think too much about them.