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What is a Merchant ID?

If you are a business owner and accept payments online, this means that you have a merchant identification number. This code is a prerequisite for electronic commerce. In this article, we will answer several questions related to the merchant id, which will be useful both to those who are just starting a business and well-established companies.

What is a merchant identification number?

Merchant identification number (merchant id, MID) – is a unique set of numbers that identifies a merchant and is issued by an acquiring bank. It is attached to a definite business and indicates whom and where to send money.

How to get a merchant ID number?

The procedure for obtaining a merchant id number is quite simple. If you want to accept payments on the site, then you need to submit an application and register a merchant account.

In addition to the application, you will need to provide official documentation: Due Due Diligence and KYC (Know Your Customer). For different payment providers, these requirements may vary.

After checking the documents, you will sign a contract and the acquiring bank will assign a merchant id.

During each transaction, along with payment information, MID is also transmitted to all involved parties. It is necessary for verification and payment direction. After the issuing bank confirms the payment, the acquiring bank transmits the funds to the merchant account.

Can I have more than one MID?

Yes, it is possible to have several merchant IDs for different business purposes. However, if your business requires diversification, for example, you need a POS terminal, for each of them you can use a unique TID.

TID or a terminal identification number is another unique identifier that indicates the source of a transaction. Regardless of how many devices you have, you can assign them a personal TID and all of them will be under the main MID.

To register a second merchant id will be rational if you have several different business websites. They sell different items and fall under different regulations.

What are the benefits of having multiple merchant IDs?

  • Risk diversification

If a merchant has several business websites that belong to different categories of business, then it is advisable to have one MID for each website. If one website has too many chargebacks, then in the case of a single merchant id, all sites will fall under sanctions.

  • Lower prices

The acquiring bank charges for its services, depending on what level of risk the business has. That is, having several websites and one MID, the tariff will be set at the riskiest. In the case of several MIDs, you can pay lower tariffs, based on the characteristics of each type of business. Also, having a trading account for each brand makes tracking sales easier.

Can I lose a merchant ID?

There are three scenarios that a merchant may face and could be fatal for their business:

Freezing a merchant account is one of the most undesirable consequences for any online business.

If this happens – the merchant will not be able to access the account and all funds will be unavailable for a certain period. Also, you will not be able to accept payments to this account.

Merchant Hold – a definition that applies when the processing center, or the bank, does not redirect funds to your bank account but holds them on the merchant account for additional verification.

Termination. Closing the merchant account due to a serious violation of the terms of use.

How to protect a merchant ID?

There is no special mechanism to keep merchant identification number out of the closure, but there are general advises that can help you to minimize risks of termination:

  1. 3D-secure technology;
  2. Phone authentication;
  3. Biometric verification;
  4. Card Verification Number;
  5. Address Verification Service, etc.

The bottom line

Having  a merchant id number is a precondition to provide any kind of online business.  If you have a website and want to start accepting payments – payment providing company PayOp will provide you a free payment platform and register a merchant id. If you have any questions – please, contact us and we will get in touch with you shortly.

How to get a merchant account?
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