History
Bank Identification Numbers (BINs) were first used in the 1980s, as the use of credit and debit cards became more common. There was a need at the time for a standardized method of identifying a card’s issuing bank. BINs were originally four-digit codes used primarily in the United States, but as card payments became more global, the length of BINs increased to six digits.
Definition
The first six digits of a credit or debit card number are known as the Bank Identification Number. Each issuing bank is given a unique BIN that is used to identify the bank as well as the type of card being used.
How it works
When a credit or debit card is used to make a payment, the BIN is sent to the payment processing network along with the rest of the card number.
The BIN is used by the payment network to route the transaction to the correct issuing bank for authorization and settlement.
What are BINs used for
Bank Identification Numbers are used in credit and debit card transactions to identify the issuing bank and card type.
Following purposes are important:
Routing transactions: BINs are used to route payment transactions for authorization and settlement to the appropriate payment network and issuing bank. BINs aid in determining the type of card being used, such as Visa, Mastercard, American Express, or another payment network.
Detecting suspicious transactions and preventing fraud: Payment processors and acquiring banks use BINs to detect suspicious transactions and prevent fraud by comparing transaction data to known patterns of fraudulent activity associated with specific BINs.
Routing transactions: BINs are used to route payment transactions to the appropriate payment network and issuing bank for authorization and settlement.
Determining interchange fees: BINs are also used to determine the interchange fees that merchants must pay to accept credit and debit card payments. Interchange fees are typically based on the type of card being used and the issuing bank.
BINs for Businesses
For businesses that accept credit and debit card payments, understanding BINs is essential. In particular, businesses need to be able to identify the types of cards being used by their customers in order to ensure that they are charging the correct fees.
Additionally, businesses may need to work with payment processors or acquiring banks to identify and mitigate fraudulent transactions.
Pros and Cons
| Pros | Cons |
|---|---|
| Standardized way to identify issuing banks and card types | Publicly available, which can make it easier for scammers to obtain sensitive cardholder information |
| Helps prevent fraud by allowing payment processors to identify suspicious transactions | Can be used by scammers to try to obtain sensitive cardholder information |
| Used to determine the type of card being used, which can impact the fees associated with a transaction | Some businesses may find it difficult to manage and maintain BIN data |
| Helps ensure that transactions are routed correctly and securely | Some card issuers may change their BINs without warning, which can create confusion |
| Crucial for enterprises that process credit and debit card transactions. | Can be subject to errors or inaccuracies, which can impact the processing of transactions |
| Important tool for facilitating transactions and preventing fraud in the global payments industry | Requires ongoing monitoring and management to ensure that BINs are up-to-date and accurate |
Why are BINs so important?
BINs are an important part of the payment processing ecosystem. They aid in ensuring that transactions are correctly routed, identifying the type of card being used, and preventing fraud. Understanding BINs is critical for businesses that accept card payments to ensure that transactions are processed correctly and securely. As the use of credit and debit cards grows, BINs are likely to remain an important part of the payment processing infrastructure, facilitating transactions and preventing fraud.
Furthermore, as the world has become more digital, BINs have grown in importance. With the rise of e-commerce and online payments, BINs are becoming increasingly important in ensuring that transactions are processed securely and correctly. As a result, BINs are an essential tool for digital businesses, providing a standardized way to validate and process payments from all over the world.
BINs vs Alternatives
| Method | Definition | Advantages | Disadvantages |
|---|---|---|---|
| BIN | A standardized method of identifying the issuer | Widely accepted and established | Potential for fraud if compromised |
| Tokenization | Replacing sensitive data with a unique identifier | Reduces the risk of fraud by preventing exposure of data | Requires integration with payment processing system |
| Biometrics | Using biometric data to authenticate the user | Convenient and secure | Requires specialized hardware or software |
| QR codes | Scannable codes used to initiate transactions | Easy to use and eliminates the need for a physical card | Limited adoption and may not work with all devices |
| Payment IDs | Unique identifiers associated with payment users | Simplifies payment processing and eliminates the need for a BIN | Limited adoption and not yet widely accepted |
BIN Scamming
BINs can be used by scammers to try to obtain sensitive cardholder information. One common scam involves the use of a stolen or forged card with a BIN that corresponds to the type of card being used. Because the BIN appears to be legitimate, merchants and payment processors may find it more difficult to detect fraud.
However, there are a number of tools and best practices that can aid in the prevention of BIN scamming, such as the use of fraud detection software and the implementation of strong data security protocols.
How to get a Bank Identification Number?
1. Create a merchant account
Before accepting credit and debit card payments, businesses must first create a merchant account with a payment processor or acquiring bank. Typically, this entails submitting an application and providing information about the company’s legal structure, ownership, and financial history.
2. Obtain card network authorization
Once a merchant account has been established, the payment processor or acquiring bank must obtain card network authorization (f.ex of an ATM card) to process transactions on their behalf. This usually entails submitting an application and demonstrating compliance with the rules and requirements of the card network.
3. Once the payment processor or acquiring bank has received authorization from the card networks, they will assign a BIN to the merchant account. For transactions processed through the merchant account, the BIN will be used to identify the issuing bank and card type.
Protect BIN against fraud
Keep BINs secure
Businesses should keep BINs secure by limiting access to them and ensuring that they are only used for authorized purposes. BINs should be treated as sensitive information and kept secure from unauthorized access.
Implement fraud detection and prevention measures
Payment processors and acquiring banks can use various fraud detection and prevention measures to help identify suspicious transactions associated with specific BINs.
This can include monitoring transaction volumes, comparing transaction data to known patterns of fraudulent activity, and using machine learning algorithms to detect anomalies.
Monitor transactions and account activity
Companies should keep a close eye on their transactions and account activity in order to spot any suspicious activity or unauthorized transactions. This can assist them in detecting fraud early and taking action to avoid further losses.
Implement strong data security measures
To protect their customer data, including BINs, businesses should implement strong data security measures. This can include employing encryption, putting in place access controls, and regularly updating software and systems to address security flaws.
Employee and customer education
Businesses should educate their employees and customers about the risks of fraud and how to avoid it. This can include training on how to detect and report suspicious activity, as well as encouraging customers to safeguard their payment card information.
Will BINs still be relevant in the future?
Bank Identification Numbers (BINs) have served as the established means of identifying the issuing bank and card category for credit and debit card transactions for numerous years, and this pattern is anticipated to persist in the years ahead.
While some emerging alternatives to BINs, such as tokenization, biometrics, QR codes, and payment IDs, are not yet widely used and are unlikely to completely replace BINs in the near future.
However, the payments industry is constantly evolving, and new technologies and methods that could eventually replace BINs may emerge. Biometrics, for example, could potentially eliminate the need for physical payment cards and associated BINs entirely.
For the foreseeable future, BINs are likely to remain the standard method of identifying the issuing bank and card type for credit and debit card transactions.