If you’re a business owner, you know that having a merchant account is essential for processing payments. But do you know what a MID (merchant identification number) is? This article will explain everything you need to know about MIDs and why your merchant account needs one.
What is a MID (Merchant ID Number)?
A Merchant ID Number (MID) is a unique number assigned to a merchant by their acquirer. The MID is typically used to identify the merchant internally by the acquirer and externally by the card networks. The MID may also be used with other numbers, such as a Terminal Identification Number (TID), to form a unique identifier for a particular point-of-sale terminal.
MIDs are typically between 4 and 8 digits long, though some acquirers may use longer or shorter MIDs. In addition to being used for identification purposes, the MID is also used in the authorization and settlement process.
For example, when a cardholder purchases with their credit or debit card, the cardholder’s bank will send an authorization request to the acquirer. The acquirer will then route the request to the relevant card network, which will ultimately route the request to the cardholder’s bank.
For the transaction to be authorized, the card network must match the MID included in the authorization request with a MID on file for the merchant. If there is no match, the transaction will be declined. Similarly, when a merchant settles their transactions at the end of each day, they will need to include their MID on each transaction to be processed.
Acquirers typically provide merchants with a list of their active MIDs to correctly identify each transaction during settlement. If a merchant includes an incorrect MID on their settlement file, their acquirer may charge them a fee or cause delays in processing. As such, merchants must ensure that they include the correct MID on each transaction.
Why Does My Merchant Account Require an Identification Number?
MID numbers serve a few important purposes for merchants and their acquirers:
- MIDs allows for precise identification of the merchant during the authorization and settlement process. This ensures that transactions are processed correctly and reduces the potential for fraud.
- MIDs allow for accurate tracking and reporting of a merchant’s sales activity by their acquirer.
- MIDs can differentiate between multiple locations or businesses under one merchant account, allowing for more precise tracking and reporting of sales activity at each location or business.
How to Find Your Merchant ID?
Your MID should be provided by your acquirer when you set up your merchant account. Typically, it will also be included in any statements or reports that your acquirer offers to you. You can contact your acquirer for assistance if you are unsure of your MID or need to confirm which MIDs are active for your merchant account.
How to Keep Your Merchant ID Number Safe?
Your MID is an essential piece of information and should be kept confidential, just like any other sensitive account information. Only share your MID with individuals or entities that require it for the authorization and settlement process, such as your payment processor or card networks.
Be wary of anyone requesting your MID who may not have a legitimate need for it, as it could potentially be used in fraudulent activities.
The Difference Between TIDs, GIDs, and MIDs
In addition to a MID, merchants may also have a Terminal Identification Number (TID) and Group Identification Number (GID). A TID is used to identify a specific point of sale terminal within a merchant’s location, while a GID is used to group multiple terminals under one MID.
While MIDs are required for the authorization and settlement process, TIDs and GIDs may not always be included in these processes and are mainly used for tracking purposes by the acquirer.
Steps to Save Money With Your Merchant Account
In addition to keeping track of and correctly using your MID, there are a few other steps you can take in managing your merchant account that can potentially save you money.
Gross and Net Funds Deposits
When settling transactions, merchants can receive their funds on a gross or net basis. With gross deposits, merchants receive their funds from each transaction without deductions. In contrast, with net deposits, the acquirer will deduct fees and chargebacks before depositing the remaining funds into the merchant’s account.
The appropriate deposit method for a business will depend on the type and volume of transactions they process and their ability to manage fees and chargebacks efficiently.
One MID for All Your Merchant Accounts
Consolidating a business with multiple merchant accounts under one MID can save on fees and simplify account management. However, it is essential to consider any potential impacts on transaction processing before consolidating accounts.
Develop a Payment Strategy
Evaluating your mid payment acceptance options and implementing strategies such as offering discounts for certain forms of payment can also help save money in the long run. This includes considering not just credit and debit card acceptance but also alternative forms of payment, such as e-wallets or digital currencies.
Working with an experienced payments partner can help you determine the best approach for your business.
Overall, keeping track of your MID and taking steps to strategically manage your merchant account can help save money and simplify account management. Contact your acquirer for assistance if you have questions about your MID or managing your merchant account.