A Quick Guide to Merchant ID

A Quick Guide to Merchant ID

The merchant ID number can be described as a minuscule code that plays an important role in every transaction. The MID determines the process of transferring funds from the bank that issued the check through the trade account. It is also crucial in preventing errors in the transfer funds.

What is a Merchant ID?

A MID is a unique code that a merchant gets from a provider of payment. You receive the code upon creating a business account at the acquirer banking. The bank that acquires the card together with the information on the cardholder, sends its MID to all processors to verify. It enhances communication between processors and the other participants.

Before you can receive the code you will need to confirm your company’s legitimacy by providing necessary documentation, such as Taxpayer Identification Number, proof of identity of the owner, and many more. In certain situations you could be issued an identification number for merchants. It’s possible to change the payment processor.

If it is used by an extortionist, your MID could be used for fraudulent transactions. So, ensure that you use all security measures that are possible.

Do I need to have more than one MID?

Sometimes, merchants are faced with the question of whether they should maintain more than one account for their business. It is true perhaps. However, for the majority of operations the one merchant ID suffices. To understand this question, first you need to know the terms. Let’s clarify what the term TID means.


“TID” means “terminal identification number.” A merchant has a unique number for each terminal on his own card. These numbers can be put together under one merchant ID. If you have multiple merchant accounts they can all be put into one.

Merchant accounts are an arrangement between the buyer and the processor. The existence of MID permits you to accept the traditional as well as alternative payment methods. In this scenario it is vital to find a reliable payment service provider such as OnionPay to offer customers more payment options.

In this situation the question is: why would merchants need to have different MIDs?

It’s typically used for accounting reasons. Businesses that have multiple channels of sales, such as hotels, restaurants and multi-channel shops, usually have unique MIDs for various revenue streams. It is helpful to distinguish and monitor where the funds originate from. As we mentioned before, however, many companies only require one MID.

What happens if I get rid of my Merchant ID?

It is definitely possible. If a business has excessive chargebacks, the loss of its MID is at risk. There’s the temporary retention, and the longer-term one that is correlated with more serious causes.

Withholding of funds

In some instances the payment processor is granted the power to block money from merchants. In most cases, it’s due to suspicious activity like a sudden rise in chargebacks.

The funds could be held until your credit card provider is able to provide you with the correct details. Also, in certain circumstances payment processors might put your funds into a permanent reserve as reserve. This method is typically applied to merchants with high risk. This reserve is known as sliding or capped payment.

Processing freeze

Processing freeze happens when the processor temporarily stops the ability of accepting cards for payment. It happens when your chargeback ratio is close to the threshold for chargebacks that is set by the payment network.

This is particularly problematic for retailers. When there is a freeze, cash-based payments are not allowed. However, the situation becomes much worse for online retailers since they are no longer able to pay with debit or credit cards.


A payment service provider (or an acquiring bank) might determine that you are an undesirable merchant that has too many risks. If this happens they could remove your merchant ID and shut down your account. Most often, this occurs in the event of a violation of bank terms or a high chargebacks ratio.

You can also use the highly risky payment provider. In this scenario the fee for transactions would be slightly more. However, you are able to complete your transactions until you get your MID back.

How can I protect my MID?

Chargebacks are among the greatest threats to every business. Therefore, if you have a high amount of chargebacks, there’s the possibility of closing the merchant’s account. However, there are numerous methods to reduce or stop an increase in the amount of chargebacks like – 

  • Verification of address
  • Connect 3D safely.
  • Utilize software to stop fraud.
  • Locators.
  • Verifying CVV Code
  • Voice Verification

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