Why Does Your Business Need its Own MID?

With the growing demand for online shopping, more and more people are using debit and credit cards for payment processing. Around 22% of the payments in the US were processed through credit cards while 41% of payments were made through debit cards, show a 2020 report by Nilson. If you don’t have a robust card processing system yet, it is high time you considered getting a premium software solution for credit and debit card transaction management. For all types of online transactions and card processing functions, you are supposed to have a MID. 

MID stands for the Merchant Identification Number, a unique code that’s used to identify a unique merchant account. In this post, we will take a look at MID, its features, and why every business needs to set up its own MID. 

What Exactly is MID? Why Do You Need One?

When your company signs up for an account with the payment solution provider, you will be provided with a unique merchant identity number. The MID has nothing to do with banking or any other business transactions. It is only used to verify your business. Note that a MID is not assigned to businesses that use PayPal, Stripe, and other such third-party payment providers. It is given to only those with a merchant account.

Each business needs a MID, not only to differentiate their business from others but to ensure a smooth transaction. Not every business has a MID, but for those who have this unique merchant ID number, this MID plays a significant role in transferring money from the customers’ account to the merchant’s bank account.

How Does it Help with Payment Processing?

To understand the role of MID in credit card payment processing, you first have to understand how credit card payments work.

  1. The customer buys a product and gives you their credit card details, which you have to forward to your merchant account provider.
  2. This merchant account provider forwards it to the acquirer
  3. Through the acquirer, the information is sent to the card issuer
  4. The credit card company checks the account balance of the customer to ensure that they have an adequate balance. 
  5. They approve this payment request and send the confirmation notification to the acquirer.
  6. The acquirer transfers the requested amount to the merchant account provider, who then sends the money to your account.

The MID plays a crucial role when the merchant account provider sends the credit card details to the acquirer and requests the payment. If the merchant account provider you are working with is connected to different layers of other businesses, the information has to pass through all these layers before it is sent to the acquirer. When the information is passed through these layers, your MID (merchant ID number) is used as the identification proof of your business. It is not possible for any business to get paid without the MID.

Do All Types of Businesses Require a MID for Payment Processing?

As mentioned earlier, MID is mandatory for each business that works with a merchant account provider. So, if you don’t have a merchant account, you don’t really need the MID. Note that if you ever decide to change your merchant account provider, you are going to have to change your MID as well.

For those working with third-party payment processors, such as PayPal, you do not need a MID. They have a different business model and they work under a big merchant account provider, so you do not need a separate MID. You must be wondering how they identify your business account when processing your transactions without a MID assigned to you. Well, they use their own unique numbers to identify each business. These third-party payment processors have an internal scheme that is used for assigning a unique account number to each business.

What is my MID?

It is important you work with a merchant account provider so that you get a unique MID. With a unique MID assigned to your business, your business will be identified easily. As we have mentioned earlier, your Merchant Identification Number is used when the payment information is passed through different links in the payment processing chain. If you face any issue with the payment and contact an entity for help, they will not be able to identify your business without the MID. 

Suppose your merchant account provider has helped you set up your business account with the help of an acquirer. You face chargeback problems and need immediate support from the acquirer. In order to reach out to the acquirer and have your issues fixed, you are supposed to know your MID. The acquirer will ask for your merchant account identification number to find your files and resolve the issue.

Where Do I Find My MID?

Your monthly statements consist of important information about your business, including its name, address, mobile number, and so on. That’s where you can find the MID as well. It is also available on online portals where you can find your credit card processing information. If you still can’t locate the number, request a merchant agreement form from your merchant account provider. It can be found in the application form. 

If you don’t have a MID, you will be identified with your email or other identification details. However, this works only when you have signed up for PayPal, Stripe, and other payment processors that work under a credible merchant account provider. Make sure you keep your MID number with other financial and legal documents, as it is this number that helps you with the account verification. Should you ever need to get in touch with the support team, you will have to reveal your MID to the merchant account provider in order to get your issues checked and resolved.

Bottom Line

Your business may need multiple MIDs to process certain types of transactions. This is especially necessary for processing bulk transactions. For processing your payments smoothly and conveniently, you need a unique MID.

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