A merchant number, also known as a merchant ID (MID), is a unique code assigned to your business by a payment processor. It plays a crucial role in enabling you to accept credit and debit card payments both in-store and online.
In this guide, you’ll learn:
- What a merchant number is
- Why it’s important for businesses
- How it works behind the scenes
- Where to get one
- Common merchant number FAQs
Let’s dive in.
What is a Merchant Number?
A merchant number is a unique 15-digit identifier that connects your business to your merchant account, which is required to process card transactions. Think of it as your business’s payment identity. When a customer taps, swipes, or enters card details, your merchant number tells the payment processor where to send the funds.
It’s like a bank account number but for receiving payments from card networks (like Visa, Mastercard, and Amex).
Why is a Merchant Number Important?
Without a merchant number, your business can’t accept card payments. And in today’s cashless world, that’s a major problem.
Here’s why a merchant number is essential:
1. Enables Card Transactions
Every time a customer pays via card, your merchant number tracks and routes the payment from their bank to your account.
2. Reduces Errors and Fraud
It ensures payments go to the right business. Without a merchant ID, processors wouldn’t know where to send the money or how to verify it’s legitimate.
3. Helps with Payment Reconciliation
A merchant number is used in your statements to match each transaction. This helps with accurate accounting and simplifies refund or dispute management.
4. Required for All Payment Terminals
Whether you use a countertop card machine, mobile reader, or eCommerce platform, a merchant number is non-negotiable.
How Does a Merchant Number Work?
When a customer taps their card to make a payment, here’s what happens:
- The payment terminal captures the transaction data.
- Your merchant number identifies your business to the payment gateway.
- The payment processor contacts the customer’s bank for approval.
- Once approved, the processor sends the funds to your merchant account.
- Funds are then transferred to your business bank account usually within 1-3 working days.
Your merchant number is involved at each step, silently handling the process behind the scenes.
Where Do You Get a Merchant Number?
You receive your merchant number when you open a merchant account through a provider such as:
- A bank
- A payment processor
- An independent sales organisation (ISO)
- A merchant services provider like Paymentsave
Most providers assign it automatically when you’re approved. The number may appear on your monthly statements, account dashboard, or be provided via email.
Always store your merchant number securely. If you ever need to contact support, update your account, or resolve a payment issue, it will be required.
Do You Always Need a Merchant Number?
In most traditional setups yes. But some all-in-one payment services like Stripe, Square, or PayPal operate under their own shared merchant account model. That means you don’t get a dedicated merchant number but are grouped under theirs.
Still, having your own merchant number (with a dedicated merchant account) gives you:
- Lower fees as your volume grows
- Better control over payment disputes
- Faster settlement times
- More credibility with card networks
So if you’re serious about your business, it’s smart to have your own merchant number.
Merchant Number vs. Merchant Account: What’s the Difference?
They’re related, but not the same:
- A merchant account is a type of bank account that holds funds from card sales before they’re transferred to your business bank account.
- A merchant number is the ID that connects your business to that account and authorises transactions.
You can’t have one without the other.
| Feature | Merchant Number | Merchant Account |
| Definition | A unique ID assigned to your business by a payment processor | A special type of bank account used to hold funds from card transactions |
| Purpose | Identifies your business during card transactions | Temporarily holds money from sales before it’s transferred to your business account |
| Visibility | Usually seen on statements or backend systems | Managed through your provider dashboard or reports |
| Assigned By | Payment processor or merchant services provider | Bank or payment provider |
| Use Case | Verifies and routes transactions to the correct merchant account | Collects and settles card payments from customers |
| Can You Have Multiple? | Yes, if you run multiple businesses or locations | Yes, if you operate separate businesses or want different funding setups |
| Required For Card Payments? | Yes | Yes |
Conclusion:
A merchant number and a merchant account work hand-in-hand to process card payments securely. While the merchant number identifies your business in each transaction, the merchant account holds funds before transferring them to your bank. Understanding both is essential for smooth, professional payment handling especially if you want to accept cards, grow your sales, and gain customer trust.
