All You Need to Know About Merchant Identification Numbers and Why You Need One
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All You Need to Know About Merchant Identification Numbers and Why You Need One
If you’re an eCommerce merchant, payment notifications are probably to you what a newborn’s cry is to its mother. In the current era where card payments make up the bulk of eCommerce payments, it’s important not to joke around with your payment acceptance process. And your merchant identification number (MID) makes up part of that process, being a necessary component for accepting card payments on your website.
Unfortunately, not many merchants understand what a merchant ID is – or how to navigate getting one for their eCommerce operations. If you find yourself in this category, you’re in luck. This guide will explain all you need to know about merchant IDs, taking you through the step-by-step process of obtaining one with ease. In simple language that anyone can understand, we aim to also provide you with all the necessary information you need to understand what Merchant IDs are.
What is a Merchant Identification Number?
A merchant identification number is a unique code provided by your payment processing provider that identifies you as a business entity that securely accepts customer card payments.
With this unique code, merchants enjoy a safe haven for processing transactions and accepting card payments through their merchant accounts. Funds can be transferred seamlessly between customer bank accounts and merchant bank accounts without the ambiguity or insecurity that could be associated with card payments, refunds, or other such cashless transactions.
Also, merchant identification numbers help card issuers to verify the legitimacy of businesses before processing the transfer of funds.
Why do you need a merchant identification number?
- A merchant ID is mandatory for accepting card payments.
- Helps you legitimately integrate your business into the payment ecosystem for the safe delivery of funds.
- For easy identification of your business, breeding trust by issuing and acquiring banks.
Merchant Identification ID vs Merchant Account ID
To clear any confusion over the difference between a merchant identification number and a merchant account ID, we will highlight the key identifying features of both. While both terms are closely related, they are very distinct from each other and it is important to understand the difference between them.
Merchant account IDs are issued by payment processors to businesses following the creation of merchant accounts. With this being said, the businesses in question would still require a unique MID for individual business units or sales channels. Each MID is unique to an individual unit or sales channel, but all MIDs are connected to the same Merchant Account ID.
How to easily create a merchant ID for your business
Merchant IDs are issued at the point of merchant account registration with either merchant service providers (MSPs) or with acquiring banks. To be accepted for a merchant account, most providers screen business types as certain industries are deemed “high-risk”. TailoredPay however, accepts most business types – including those considered “high-risk” by conventional providers.
To successfully register for a merchant account with an MSP, you will need to undergo a verification process and provide proof of ID to complete the process. The type of ID proof required will depend on the requirements of the MSP or acquiring bank you choose. If your application gets approved, a merchant ID number is yours! Once acquired, your merchant ID remains unique to your account. You’ll only need to get a new merchant ID number if for any reason you switch merchant account providers.
As the proud owner of a merchant ID number, it is important to stick to the terms of your MSP to prevent your account from getting frozen or flagged. While chargebacks are inevitable in the industry, excessive chargebacks can get your merchant account flagged so the key is to try to avoid them if you can.
Where to find your merchant ID number
Merchant ID numbers are confidential and not available in the public domain. Anyone who needs to access your merchant ID number will need to be directly involved with your business and authorized to have access to your MID. You must guard your MID jealously against being exposed to unauthorized persons.
There are several locations where you can find your Merchant ID in the event that you ever need to retrieve it. Some of the most common locations include:
- Your bank statement
- Your merchant statement
- Your terminal
- Contacting your merchant services provider
- Via PayPal
- Via Square
- Via Google Pay
How to protect your Merchant ID from chargebacks
Dealing with chargebacks as a merchant can be overwhelming, time-consuming and expensive, so it is important to take the necessary steps to protect your merchant ID against chargebacks.
The consequences of being incapable of dealing with chargebacks include the possibility of having your account frozen or even your MID revoked. However, the good news is that there are several steps that can be taken as a merchant to guard against chargebacks. With the right information, you can put your best foot forward towards protecting your business from unnecessary chargebacks.
Here are the top three actions you can take immediately to protect your Merchant ID from chargebacks:
- Use Card Verification Value (CVV): This serves as a fraud prevention filter that helps to ensure a match between the customer’s card’s actual CVV number with the CVV number entered at the online checkout.
- Activate Address Verification (AVS): Address verification helps you verify a correlation between your customer’s billing and shipping addresses. With this, you can automatically decline an order if you discover discrepancies between both addresses.
- Apply 3D Security: This can serve as authentication from your customer’s card issuer.
Can I have more than one Merchant ID?
The answer to the above question is a resounding YES. Your business can have more than one Merchant ID number – especially if you are likely to receive payments from multiple sources under the same business. For example, if you run a restaurant that sells sauces online, and offers cooking courses, you could get unique merchant ID numbers to match each revenue stream.
What other ID types should you know about?
Apart from Merchant IDs, there are a few other types of IDs that exist within the card payment processing sphere to be aware of. These include:
- Specific network IDs for merchants (GIDs)
- IDs of a specific terminal (TIDs)
Network and Terminal IDs ease the process of identifying the business, the terminal, the particular branch of the business, and the network of a particular transaction.
Why you should choose TailoredPay as your merchant account provider
In summary, we hope that this simple but concise guide has answered all your questions related to merchant identification numbers. With the knowledge provided on this page, you should feel confident about what a merchant identification number is and how to seamlessly acquire one.
TailoredPay offers the perfect merchant account and merchant identification number solution especially for ecommerce merchants who have had negative experiences with mainstream payment gateways in the past. With much higher acceptance rates than other providers, TailoredPay offers businesses affordable, secure payment gateway and high-risk merchant account solutions that are PCI compliant and compatible with a variety of card types. For bonus points, there are no set-up fees and approvals take 48 – 72 hours!
So if you’re looking for a complete payment gateway solution that won’t hold you back, apply at TailoredPay today, and take your business to the next level.