A Merchant Identification Number, or MID for short, is a unique number assigned by MasterCard to registered merchants. It uniquely identifies the merchant company on the MasterCard network and facilitates transactions that come into question. The numbers are 14-digit long and can be found on any authorized cardholder receipt issued by the merchant.
When you buy something on your credit card, the store will send all relevant information to the bank. The bank will check this data against their records, make sure it is valid and request payment from MasterCard (for which they charge a small fee).
When MasterCard receives this request, it will forward this message through its network to confirm or deny whether the account number and other relevant data (security code and expiration date) match their records. If the transaction is approved, MasterCard will inform the bank, which in turn will refund the amount to your account and/or send you a statement that shows all recent activity.
When making a purchase online, such as at Amazon.com, the process behind this is basically the same, except that the bank doesn’t actually request payment from MasterCard. Instead, they just send all relevant data to MasterCard and let it handle the transactions itself. In this scenario, the merchant never needs a MID because MasterCard will automatically add them. The only reason why merchants have a MID is when they want to accept traditional card transactions, in the same way they would at a brick-and-mortar store.
Merchant Identification Numbers are assigned to merchants by MasterCard itself. There are several types of MIDs: basic, enhanced and select. Each type has its own rules regarding what kind of information is required to get approved for one. However, since 2013, all new accounts are now issued with an enhanced MID, which means the basic one is no longer necessary.
The type of account you open also depends on how much data you’re willing to share with MasterCard. When applying for a basic MID, you’ll need to disclose your business name and address, as well as the owner’s name and tax ID number. Enhanced accounts require a bit more, such as a website address, a phone number and email address.
For select accounts, the information requested is even more extensive, like monthly sales volume or processing averages per month (with different tiers for different amounts), along with your company’s logo to include on MasterCard statements.
Why does businesses need a Merchant Identification Number?
Before we explain why businesses need a MID, it’s important to remember that every time someone makes a purchase with their credit card at your business, you’re authorized to charge them. What this means is that when the person swipes their card and enters in their secure code, the bank sends out a message (similar to an email) asking if you’d like to charge the person’s account.
However, before this message is sent out, MasterCard and the bank need to make sure your MID is valid; that you are who you say you are and that there aren’t any outstanding debts or other issues preventing them from authorizing your transaction.
How do I get a Merchant Identification Number?
First, you’ll need to speak with your bank and MasterCard to figure out what information they require. Generally speaking, you’ll need:
With newer accounts, the process is usually much simpler and streamlined, and involves less paperwork than it used to. The hardest part about the whole process is probably finding a suitable person at MasterCard or your bank to speak with. Every company has different procedures and rules regarding the creation of accounts, so you might need to do some digging before finding out exactly what information they’re after.
Once you’ve completed all the necessary paperwork, it will take anywhere from 2-4 weeks for your MID to be approved. From that point on, MasterCard will send you an email to let you know that your account is now active and ready for business.