What is a Merchant Identification Number?

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Merchant Identification Number
If you conduct your business online, you’ll need a merchant identification number in order to process credit card transactions — securely.

With the rise of the internet and ecommerce, merchant ID numbers were created to help protect both the business and customer. A merchant identification number (MID) is a code that is associated with an online business and plays a pivotal role in keeping the transactions between the customer and business secure — including protecting the customer’s sensitive information.

As the name implies, the merchant identification number correctly identifies the business when the customer makes a credit card purchase online — all through a computer network. As an online merchant, before you can start selling your items or services, a payment processor will need to give you a merchant identification number.

In short, the merchant identification number will help not only identify the business and secure the credit card transaction, but will ensure that the right amount is withdrawn from the customer and credited to the merchant — all through secure and appropriate channels.

Merchant Identification Number vs. Merchant Account ID

The merchant identification number is different from a merchant account ID. A merchant account ID is given to businesses that deal with different types of transactions, but operate under the same umbrella. For instance, if an organization has various branches of businesses — such as a multichannel retailer — each channel would have different merchant account IDs but all would function under the same merchant identification number, just as they all operate under the primary business.

Terminal Identification Number vs. Gateway Identification Number

A terminal identification number (TID) is another number used to distinguish merchants. However, this number is based on the equipment or terminals a business uses to process a sale. Depending on how many terminals an organization has, they could have multiple terminal identification numbers.

A gateway identification number (GID) is based on the network a business uses to process a sale.

Your Merchant Identification Number & Fraudulent Activity

Together, all of these types of identification numbers work together to protect transactions and fight fraudulent activity. Because of this, it’s important that businesses keep all of these identification numbers secured. Only a select few within the organization should have access to it.

If your business experiences a high level of disputes, it is possible for your payment processor to revoke your merchant identification number. If that occurs, you’ll lose the ability to process credit cards and will have to find another payment processor, one that is high-risk.

As for short-term holds, payment processors may withhold transaction funds or temporarily freeze your merchant identification number if there is a spike in fraudulent activity.

How to Obtain a Merchant Identification Number

First, you need to verify your online business before you can get a merchant identification number. Business documents that contain the principal owner names and/or the taxpayer identification number can verify your business. Once your business is verified, the payment processor will open an account and give you a merchant identification number.

Additionally, it is common for businesses to have multiple merchant identification numbers if they open accounts with additional payment processors. If you switch payment processors, you’ll be issued a new merchant identification number with your new payment processor.

With the rise of the internet and ecommerce, merchant ID numbers were created to help protect both the business and customer. A merchant identification number (MID) is a code that is associated with an online business and plays a pivotal role in keeping the transactions between the customer and business secure — including protecting the customer’s sensitive information.

As the name implies, the merchant identification number correctly identifies the business when the customer makes a credit card purchase online — all through a computer network. As an online merchant, before you can start selling your items or services, a payment processor will need to give you a merchant identification number.

In short, the merchant identification number will help not only identify the business and secure the credit card transaction, but will ensure that the right amount is withdrawn from the customer and credited to the merchant — all through secure and appropriate channels.

Merchant Identification Number vs. Merchant Account ID

The merchant identification number is different from a merchant account ID. A merchant account ID is given to businesses that deal with different types of transactions, but operate under the same umbrella. For instance, if an organization has various branches of businesses — such as a multichannel retailer — each channel would have different merchant account IDs but all would function under the same merchant identification number, just as they all operate under the primary business.

Terminal Identification Number vs. Gateway Identification Number

A terminal identification number (TID) is another number used to distinguish merchants. However, this number is based on the equipment or terminals a business uses to process a sale. Depending on how many terminals an organization has, they could have multiple terminal identification numbers.

A gateway identification number (GID) is based on the network a business uses to process a sale.

Your Merchant Identification Number & Fraudulent Activity

Together, all of these types of identification numbers work together to protect transactions and fight fraudulent activity. Because of this, it’s important that businesses keep all of these identification numbers secured. Only a select few within the organization should have access to it.

If your business experiences a high level of disputes, it is possible for your payment processor to revoke your merchant identification number. If that occurs, you’ll lose the ability to process credit cards and will have to find another payment processor, one that is high-risk.

As for short-term holds, payment processors may withhold transaction funds or temporarily freeze your merchant identification number if there is a spike in fraudulent activity.

How to Obtain a Merchant Identification Number

First, you need to verify your online business before you can get a merchant identification number. Business documents that contain the principal owner names and/or the taxpayer identification number can verify your business. Once your business is verified, the payment processor will open an account and give you a merchant identification number.

Additionally, it is common for businesses to have multiple merchant identification numbers if they open accounts with additional payment processors. If you switch payment processors, you’ll be issued a new merchant identification number with your new payment processor.