Merchant ID: What It Is and Why It Matters for Your Business

Merchant ID: What It Is and Why It Matters for Your Business

Merchant identification numbers are one of those perplexing terms that are volleyed around casually in the payments industry. They’re also referred to as Merchant IDs. 

Now, here’s where it gets a bit confusing: merchant ID numbers are not the same as merchant account numbers. But don’t worry. We’ll break both terms down for you in a moment.

Your merchant identification number is a unique ID given to you by your payment processing company. Thankfully, they’re a lot less complex than they seem at first glance. 

In this article, we will demystify merchant identification numbers and talk about what they are, why you need one, and other FAQs about the process.

Let’s dive in.

What is a merchant identification number?

A merchant identification number is a unique ID that businesses use to accept and process card payments with a merchant account.

Why your business needs a merchant ID number

Your business needs a merchant ID number for credit card processing. It’s how your bank (the acquirer or acquiring bank) receives funds from your customer’s bank (the issuing bank).

So how does this work? Your customer’s credit card issuer uses your merchant ID number to verify that your business is legitimate. 

Your merchant ID number is your unique identifier when your payment processor interfaces with your customer’s bank account. It’s how your customer’s bank knows where to send your money from each transaction.

Infographics Merchant Id 1

Merchant ID number vs merchant account ID

Your merchant account ID number identifies your entire business’s payment gateway on your merchant statement. Whether you use your POS system or mobile credit card terminals, your merchant account ID remains the same. 

It also remains the same no matter what business is processing a transaction. This is especially pertinent for businesses that share the same payment processing equipment under one roof.

Your merchant ID number, on the other hand, is an account number for a specific merchant account. If you share a space with another business, you won’t have the same merchant ID number as other business owners. You’ll process debit and credit card payments under your own unique codes.

Your merchant ID number will allow your payment processor to identify which transactions came from which business – even when you’re all using the same payment gateway.

Your merchant ID number will also be used to differentiate different branches of the same business during e-commerce transactions. Say your small business has a different online channel for shoe sales, camping equipment, and jackets. You’ll process cardholder transactions under a unique merchant ID number for sales on each channel.

How to get a merchant ID for your business 

You can get your own merchant ID number from your merchant services provider when you open a payment processing account. Your unique code can then be used to reference your account and verify transactions.

However, third-party payment processors like PayPal and Square don’t issue merchant ID numbers. That’s because they operate from one big aggregate merchant account, instead of differentiating between businesses like most payment processors.

How to keep your merchant ID safe

Perhaps the biggest thing you need to know about your merchant ID, is that it’s important to keep it safe. Fraudsters can use it to steal money or misrepresent your business. If fraud leads to chargebacks –– often caused by “friendly” fraud ­­–– your business may be flagged as “high-risk.”

Chargebacks can lead to a processing freeze, meaning your business won’t be able to process any transactions. It can also lead to withheld funds or full-scale account termination. It’s scary stuff. 

A recent survey from PwC found that 48% of respondents were “the most concerned about” data privacy and cyber security. Fortunately, there are a few easy ways to protect your merchant ID number and prevent chargebacks:

  • 3-D secure. This means requiring a PIN code for account verification, thus adding another layer of protection from hackers.
  • Address verification service or AVS. A tool used by credit card processors given to merchants to help detect suspicious activity and fraud. AVS verifies the buyer’s billing address and the credit card holder’s address.
  • CVV verification. This means requiring the back-of-card security code to process card transactions.
Infographics Merchant Id 2


Got more questions on your mind? Here are a few quick answers to commonly asked questions about merchant IDs:

How can you find your existing merchant ID?

There are a few places you can find your merchant ID. These include your bank statement, the upper right-hand corner of your merchant statement, or your payment processor’s website. Sometimes you can even find it on a sticker affixed to your POS station.

Can you have multiple merchant IDs?

Yes. Particularly if your SMB has different branches or sectors.

Is it possible to lose your merchant ID?

Absolutely, and you risk fraud if you do. Keep your merchant ID in a secure, private location.

Can your merchant ID get blacklisted?

Your merchant ID can get blacklisted and end up on Mastercard’s MATCH List of high-risk merchants. This will only happen in cases of multiple chargebacks or fraud.

Is a merchant ID permanent?

No. Your merchant ID number will change every time you work with a new processor.

What are some other types of identification numbers?

We’ve already talked about merchant account IDs. But you also don’t want to confuse your merchant ID number (MID) with your terminal identification number (or TID). Your TID is even more specific, tracking the individual terminals where transactions are processed –– not to be confused with your taxpayer identification number (aka your social security number).

The bottom line

Highest Rated Payment Processor In The Market

As you can see, keeping your merchant ID number safe is an important component of running a successful retail business. That’s why it’s important to partner with a payment processing company with built-in safety measures to protect your data.

Payment Depot doesn’t just offer a pricing structure that helps merchants save an average of $400 a month on credit card processing. We’re also PCI compliant and take full responsibility for the customer information under our purview. We protect your company’s data, so you can focus on running a successful business. Contact us today to learn more. 

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