A merchant ID number is a unique identifier typically assigned to businesses when they open a merchant account. The number is used to clearly identify a merchant who is attempting to process a transaction to both the processing company and the customer’s bank (or card-issuing bank).
This identifier is the reason sales made by a given merchant eventually lead to money being transferred from the cardholder’s bank to the merchant’s bank account. Without the merchant ID number, the card-issuing bank wouldn’t know where to send the money.