When you’re starting a business or in the daily grind of growing your company, it’s easy to get confused by all the financial terms thrown around. It can be hard to understand what they mean and how they affect your company.
We’ve created this guide to assist you while you do a Merchant ID Number lookup so that you’ll never be left in the dark again. Our goal is for you to feel confident when making decisions about accepting credit cards for your company.
Merchant ID Number Lookup
You should be able to look up your Merchant ID Number on any transaction receipts or statements. It may also be printed on business cards or correspondence, depending on the merchant services company you use. If you do not have a receipt or online transaction history, contact your bank or credit card processing company and request the number.
Accepting funds via card payments
Being able to receive funds via card payments makes life easier for customers and merchants. However, processing money online can also be complicated.
To learn about merchant identification numbers, their purpose, and how to apply for one if you’ve been deemed high-risk, read this article.
Common questions include:
- What do all the numbers on your merchant account statement mean?
- What can you do to reduce fees and improve security?
- How can you prevent chargebacks and fraudulent transactions?
- What is a Merchant ID (MID) Number?
- How can merchants who have been designated high-risk process funds without being shut down or charged higher fees?
What is a MID?
A MID (also known as a Merchant Identification Number or MID number) is a unique identifier for businesses that accept credit card payments.
It helps businesses receive funds via card transactions without having to share sensitive financial information like credit cards numbers.
Why do you need a merchant ID?
The PCI Security Standards Council advocates the use of a merchant identification number as a way to track which organization a transaction came from. A merchant ID helps determine liability in case of fraud or security breaches.
What is the MID NOT used for?
A merchant identification number does not contain any information about your business or you as an individual merchant. It does not distinguish between commercial users and personal users. The MID cannot be used to help validate age, location, or other information used to determine credit card verification. It only defines the organization that accepted the credit card.
How do I get a MID?
Your merchant account company can issue you a MID. A merchant account enables businesses to process electronic payments from debit and credit cards. Instead of waiting for customers to pay their bank, businesses can immediately access the funds from transactions.
Where do I enter my Merchant ID/MID number?
The location of where to input your merchant ID number may vary based on the processing platform and website. Usually, it is on the login page.
What can put your merchant identification number at risk?
Chargebacks and chargeback fraud can put your merchant ID at risk. Fraudulent users might attempt to purchase items and issue a chargeback or initiate an unauthorized transaction, which results in a chargeback.
Prevent chargebacks with tools such as dynamic security codes and card brand authentication. The more layers of security you have in place to prevent fraudulent use of your merchant ID number, the better off you will be.
The best way to avoid having your merchant account shut down is to follow all PCI-DSS requirements and implement security measures like card brand authentication, dynamic security codes, and secure servers. You should also separate your commercial and personal transactions.
Do all businesses need a merchant ID?
All businesses that accept credit card payments will need a merchant account and MID number. This is to ensure the business accepting payment has the correct information related to the charge, even if it is an electronic transaction.
What is an acquiring bank?
An acquiring bank is a financial institution that processes electronic credit card transactions for a merchant. This will be your first step to setting up an online business. An acquiring bank will provide you with all of the required equipment and software needed to process credit cards, including a merchant account and MID number.
The main purpose of an acquiring bank is to facilitate the authorization, settlement, and clearance process for credit card transactions.
What is a payment gateway?
A payment gateway allows your business to connect with multiple financial institutions to accept electronic payments from credit cards, debit cards, and alternative methods like PayPal. Your bank will provide you with a unique IP address to set up an account with a payment gateway service.
What is a terminal ID?
Your terminal ID is the number that identifies your specific point-of-sale credit card processing equipment. The acquiring bank will provide you with a terminal ID for each of your credit card terminals. It’s important to keep track of these numbers so they are readily available when needed.
How do I get a terminal ID?
Your acquiring bank will provide you with your first terminal ID upon account set-up. You may be requested to enter this number into the appropriate fields throughout the checkout process. If you have more than one credit card processing device or simply want to update your existing ID, contact your acquiring bank for assistance.
What is a high-risk merchant account?
Merchants who are considered high-risk typically process a higher number of transactions and/or receive higher amounts for each transaction. They also may operate in an industry thought to be at a heightened risk of fraudulent activity.
High-risk merchants often pay higher processing fees and are required to provide additional information to set up an account.
Card brands like Visa and MasterCard require high-risk merchants to use a special gateway designed for businesses with a higher risk of chargeback or fraud. This payment gateway is separate from your primary merchant services account (called the ‘funding’ or ‘acquiring’ account).
Who needs a high-risk merchant account?
Many banks have different policies concerning which businesses they will allow as customers. Depending on your industry, you may be turned down by one bank but accepted by another. Here is a list that highlights some of the industries that may be considered high risk:
- Adult entertainment
- Tobacco retailers
- Cannabis products
- Forex trading
- Pawn stores
- Debt collection
- Life coaching
- Online marketing
A high-risk merchant account can be a great way for businesses with a higher risk of chargebacks to receive funds from credit card sales.
High-risk merchant account fees
High-risk merchant account fees are typically higher than low-risk merchant accounts because of the risk associated with running a high-risk business. However, some high-risk processors do have no per-transaction fees. All in all, you can expect to pay 2%-5% more for your high-risk processing when compared to standard rates.
How to apply for a high-risk merchant account
The steps to apply for a high-risk merchant account are virtually the same as applying for any other merchant services account. You should be filling out standard paperwork like an application and terms and conditions document. However, you may need to provide more documentation than other businesses, including:
- Copies of licenses associated with your business
- Address verification for your business
- List of principals associated with your business
- List of all websites associated with your business
- Detailed description about the products or services you are selling
The advantages and disadvantages of a high-risk merchant account
High-risk merchant accounts typically charge high-risk rates and fees. However, the extra money you make from increased sales and lower processing costs can often make up for these expenses, all while keeping your business free of chargebacks.
The disadvantages of a high-risk merchant account include extra fees associated with setting up and maintaining your account.
The advantages of a high-risk merchant account include:
- Less time spent on setting up your account
- Faster access to funds from processing sales
- Increased sales from accepting credit cards at your business
High-risk merchants often benefit from increased exposure and credibility by having a merchant account.
What to consider when getting a high-risk merchant account
Let’s take a look at what you need to consider when shopping for a high-risk merchant account:
- Rates: Make sure you shop around and compare rates and fees to find the best deal.
- Annual Fee: High-risk accounts often have an annual fee.
- Funding Requirements: Your funding requirements will vary depending on the account you choose. This determines the minimum amount you must deposit into your account before using it to process credit card transactions.
High-risk merchant account fees
When looking into high-risk processing, many costs come into play. These include the per-transaction fee, monthly minimums, monthly statement fees, gateway/software fees, and annual fees.
- Per Transaction Fee: High-risk processing rates are different than standard merchant account rates because they are based on the riskiness of each transaction. The per-transaction fee is included in these high-risk rates to help cover the cost of chargebacks and fraud that you may incur.
- Monthly Minimums: Most high-risk accounts come with a monthly minimum which is also known as a monthly service fee.
- Statement Fees: A statement fee is charged when you receive your merchant account statement. Your statement is sent to you every month, so it is important to check this information for any errors or discrepancies that may occur throughout the months leading up to your next statement.
- Gateway/Software Fees: The gateway/software fee covers your payment processing software, transaction fees, and necessary equipment.
- Annual Fees: High-risk accounts also come with an annual account fee, which can sometimes be waived for the first year. This is a set yearly charge that you will owe in addition to all other fees mentioned above.
Risks involved with high-risk merchant accounts
Those who maintain high-risk merchant accounts face the possibility of losing money through chargebacks. A chargeback occurs when your client returns a product or cancels a service that they had purchased from you. If you receive too many chargebacks, your account could be closed due to excessive fraud or violation of contract terms.
Can I still be approved for a high-risk merchant account if I have an unpaid chargeback?
You may still be able to get approved for a high-risk merchant account if you have had charges reversed by the bank in the past. The best way to find out for sure is to apply and see if you are approved.
How to set up your high-risk merchant account
Opening a new merchant account can be time-consuming and frustrating – especially for companies that are considered high-risk.
It makes sense to work with an expert who has experience working with high-risk businesses, as this will speed up the process and ensure you get your account opened quickly.
It is also important to find a reputable company that will not only give you the best rate possible but also streamlines the application process.
Most banks don’t want to deal with high-risk businesses, but Zenti is different. We know that you need an easy way to process credit cards for your business, and we’ve got the solution.
Zenti can help you get set up with an adult merchant account, offshore merchant account, or bad credit merchant accounts. We specialize in helping businesses that are undercapitalized or have had past problems with traditional bank card processors. Our team of experts will work hard to find the perfect solution for your unique situation and ensure that you receive excellent service throughout the process.
Whether you run a marijuana dispensary, CBD store, adult entertainment site, or any other high-risk industry we can help.