What is a Merchant ID? 🧐
Let's start by defining what a Merchant ID is:
"A unique identification number sequence associated with a physical or online merchant location, typically allowing payment processors involved in a transaction to know where to send which funds. It’s effectively an address within the payment ecosystem. Without a merchant ID, the networks involved won't know where to send the merchant's money."
To put it simply a merchant ID or (MID) is Merchant Identification Number.
This is a unique code provided to a merchant by their payment processor. Often abbreviated as MID, this code is transmitted along with the cardholder information to involved parties for transaction reconciliation.
Where can you locate a Merchant ID? 👀
Merchants can typically find their merchant identification number on their billing statement from their payment processor. If a client has a close relationship with their merchants and feel comfortable doing so they can point them toward their payment processor and ask them to locate their MID, explaining that having it will expedite the onboarding process with Fidel. Another place merchant have access to their MID is within their payment processor's online merchant portal.
💳 Different Card Brands use unique MIDs.
Mastercard and Visa refer to this unique number as the MID.
Amex's equivalent to a MID is called a Service Establishment Number.
What is a Payment Processor? 🧾
The payment processor manages the credit card transaction process by acting as the mediator between the Merchant and the financial institutions involved.
What does a Payment Processor do?
When a you insert, tap, swipe or even type your credit card number in to pay for something that triggers the creation of an auth, (short for authorization).
The merchant's point of sale (POS) software sends this auth through their payment processor who acts as an intermediary for the merchant's payment software system to access the credit card networks and be able to accept credit cards as a form payment.
The auth is a payment event that sends a quick call for verification through to the issuing bank to see if the card is valid (not expired, lost or stolen) and that it has funds associated with it.
This request goes to the credit card's issuing bank (where the cardholder got the line of credit from) and returns instantly either an "approve" or "decline" response that is sent back through the payment processor to the merchant's payment software.
This entire process happens in just a matter of seconds. If the card gets approved and the transaction gets finalized and settled then the payment processor deposits the funds from that credit card transaction into the merchant's bank account.
As complex as this process is, it makes the ability to pay for things very convenient. In our increasingly digital world not accepting credit cards is like turning away money from people willing to spend it.
Helping Merchants Find their Payment Processor: 📍
To figure out who is processing their credit card payments merchants can look at their deposits that fund from their credit card transactions. In the description of the deposit it should identify who sent the funds. The funds will be sent from the payment processor the merchant is using.
The payment processor is the keeper of the Merchant Identification Number or MID. 🔒
The payment processor charges the merchants regular fees to be able to accept credit cards on behalf of themselves and the card brands. If a merchant has their statement regarding processing rates and fees for credit card transactions that statement should be from their payment processor and the MID (sometimes called merchant number) should be printed on it.
Why is a MID important?
When a Merchant consents to allow us to access their MIDs it gives us the ability to return higher levels of accuracy in the data we provide to our clients. Many times locations can be complex to track due to situations like malls or shopping centers where one physical street address can be the site of twenty, fifty or even hundreds of different individual stores.
A Specific MID relates to a specific store. 🛍
MIDs become more valuable when it comes to specific locations that may contain thousands of transactions occurring in one day at one address, but thanks to the transactions going through specific MIDs they are safely connected to the store where the purchase was made.
A store with both a physical and online locations will have different MIDs for each. The transactions processed online are running through an entirely different MID than those processed within the physical store. This further breaks down the data accurately to specify where the transaction actually occurred.
Providing a MID during onboarding with Fidel can help to guarantee high match rates for transactions and locations, even in locations with high-turnover rates, and even on the busiest days of the year. Providing a MID during onboarding can also reduce the onboarding of the merchant to a single day.
Merchant Data is safe with Fidel.
At Fidel we understand that a MID is a very sensitive piece of information. We handle data compliant to PCI DSS regulations. We tokenize all of our data and assign it unassociated equivalent data elements that act as a reference point to the original data. The resulting outcome is a 'token' that disguises the original data but still allows the necessary information to communicate across and back to our clients securely.
At Fidel we use tokenization in many areas within our APIs, including how we send and receive transactional data in real-time with the major card networks. The MIDs are received by Fidel via our encrypted closed-loop API, which tokenizes the MIDs before they are collated into our secure dashboard.
Fidel passes MIDs directly to our network partners who have their own encryption processes for secure file transfers. Regardless of where the MID goes from there it's securely concealed in encryption language as the transaction data tokens we produce. The card network's own secure information transfer process further ensures that the information throughout its whole journey remains secure. Whenever that information is within our API, it is unreadable to anyone outside that circuit. Fidel makes a point of requesting that any information sent to us is done so via our API or SDKs to make sure that it's captured securely.
We place consent at the very beginning of the process, which is why each merchant is either asked to share their MID or we can offer to locate it ourselves via our virtual card process, but only with the merchant's consent to do so.
Using Virtual Cards to find MIDs:
We understand that not all of our clients have the desire nor ability to obtain the MIDs directly from their merchants. It could just be that their merchants cannot figure out what their MID is.
A solution that we have created to assist these clients is issuing virtual cards.
Fidel can issue a client with a virtual card that is associated to their email address.
To find a MID using the virtual card, buy something to create a transaction through a physical or online store and check out as you would with a regular credit card. Rather than paying with your credit card you can enter the virtual card details instead. A virtual card issued is not a real physical credit card, however you can add it to your mobile wallet on your smartphone for use as a contactless payment even in a physical location.
The virtual card 💳 has 3 elements:
(1) card number
(2) expiration date and
(3) CVV (just like a normal credit card)
One key difference that results in paying with a virtual card is that there are no funds associated with the card. The expected behavior when you go to pay with a virtual card is for the auth to return a decline. ⛔️
This is not an issue because the process returns us the data. After the card declines an email is instantly generated and sent to the virtual card's associated email address. This email contains both the merchants name and MID.
The client can use the MID to on-board the merchant location - the usage of the virtual card helps boost match rates to near 99.99%. This approach does not include Shared MIDs, which Fidel is continuing to work with the card schemes to remediate.
The Best is Yet to Come 🎉
We are standing on precipice of the future of digital payment technologies. 🌐💸
At Fidel we are progressively working towards automating and optimizing these processes to create ⏰ faster, easier and more accurate deliverables to our clients.
Fidel will soon be releasing some new solutions to further facilitate our clients ability to locate MIDs.
We are in the process of developing these solutions and we can't wait to release them!
Don't forget to follow Fidel API on LinkedIn and check out our blog @ https://fidel.uk/blog for new exciting revelations that will be coming in this area soon!
If you need help more help finding MIDs reach out to our support team at firstname.lastname@example.org