Payments. Ecommerce. Profits.

How To Create A Merchant ID

How To Create A Merchant ID

Processing payments can be complicated. The powerful engineering behind transactions that happen quickly and easily is the work of a huge range of components controlling them. These components need to be effective and efficient, but also secure and the information contained therein confidential. 

Some of this ingenuity is due to how accurately chargebacks, payments, refunds, and transactions travel between acquiring banks, clients, issuing banks, and merchants. An important component of this system is based on specific merchant IDs.

When certain data is attached to merchants, payment systems can deliver funds to the correct businesses reliably. But how do you create a merchant ID? That’s what we’ll be answering in our article today! But first, let’s further define what a merchant ID is. 

What Is A Merchant ID?

A merchant ID (sometimes called an MID) is a unique identification number associated with a business that lets payment process systems know where funds need to be sent. It’s almost like a business address. If your business doesn’t have a merchant ID, then networks will not know where they need to send funds. 

Merchant IDs are just as crucial as bank accounts, and they should be viewed with the same importance. If you share this ID widely then you leave your business open to vulnerabilities, so it’s advised not to share your merchant ID unless it’s absolutely necessary. 

How To Create A Merchant ID

When you become a customer of an acquiring bank you will receive a merchant ID number. You will either receive this merchant ID directly, or via a MSP (Merchant Service Provider). This involves verifying your business. You will need data on business ownership, a tax number, and more. 

Obtaining a merchant ID can feel like a daunting task, but it’s actually easier than it looks. Once you’ve obtained your merchant ID it is yours for as long as you’re a customer with your credit card processing company. That is, unless you get penalized for excessive chargebacks. 

Chargebacks are a routine occurrence in any business, especially if you run a consumer or retail business. However, an excessively high chargeback rate is often an indicator that a business takes advantage of customers, and so if you receive many chargebacks, it gets your transaction rights revoked. 

Your acquiring bank may freeze your funds or account after investigating your transaction history. Naturally, this can do a lot of harm, as it basically prevents you from receiving transactions.

However, there are many ways you can prevent chargebacks. Let’s take a look at some of them: 

  • AVS (Address Verification Service)
  • Verifying CVV
  • Recruiting a chargeback representative for your business. 
  • Geolocation verification
  • 3D Secure

If you change to a different acquiring bank for another reason (for example, poor service) then your new processor will need to provide you with a new merchant ID. This is no small task, so switching acquiring banks isn’t a decision that warrants serious consideration. 

However, if you’re a customer of an acquiring bank that charges you unexpected fees, is always unavailable, and is generally providing you with poor service then you should definitely look into changing providers. 

Where Can You Find Your Existing Merchant ID?

Merchant IDs are not publicly available, so cannot be found with online searches. So if you’re trying to find the merchant ID for a business you’re not involved in, there is no database of merchant IDs you can use to look up these numbers.

As we mentioned previously, merchant IDs are private information and their purpose is to route money. Therefore, you wouldn’t want your merchant ID to become publicly available. 

Merchant IDs normally contain 15 digits. This may differ however, depending on your acquiring bank. You can find your merchant ID in a couple of different ways:

Bank statements: Your merchant ID should be printed somewhere on your statement. This might sometimes be abbreviated. You can find this where the debits and credits from your acquiring bank are. They normally start with MTOT or BTOT.

Contacting Your Acquiring Bank: If you can’t find the figure on any paperwork, the next best option is to get in touch with your acquiring bank. 

Merchant statements: The statement from your acquiring bank should have your merchant ID at the top right of your merchant statement. 

Your Payment Terminal: Acquiring banks or processors may store your ID on your payment terminal. You may find this on the bottom of your payment terminal, or on the sides. 

Google Pay: Head to your Google Play settings and your public merchant profile and you should see your merchant ID.

PayPal: Go into your PayPal profile and you should see your merchant ID under ‘My Business Info.’

If you’ve long been running a successful business, and/or your business has multiple locations, then you definitely need a merchant ID and seek out the services of an acquiring bank or MSP.

They can provide your business with the appropriate fee systems and structures to help save you money while improving the customer experience. 

Other Types Of IDs

A merchant ID is not the only type of ID in the world of payment processing. There are a couple of other IDs that fulfill a similar purpose to merchant IDs. 

GIDs: A specific network ID for merchants.

TIDs: A specific terminal ID.

Terminal and network IDs enable a system to identify the business, a particular branch of a business, the terminal, and the network of a particular transaction. GIDs, Merchant IDs, and TIDs are the main forms of identification you need to monitor when it comes to processing payments. 

Frequently Asked Questions

Is It Possible To Have More Than One Merchant Number?

Yes! If you have a range of multiple merchant accounts for different modes of doing business (i.e. you have an online business and an offline one), then it is important to have a merchant ID for both. 

How Can I Secure My Merchant ID?

To keep your chargebacks down, it’s important to implement AVS (Address Verification), CVV (Card Verification Value), and 3D Secure authentication to protect online transactions.

Final Thoughts

And that’s merchant IDs in a nutshell! While merchant IDs are crucial to your business operations, the truth is that once you obtain a merchant ID, you don’t need to think about them too much. If you don’t already have an MSP, then we recommend seeking out one right away to get your merchant ID.