Nowadays, credit and debit cards have overtaken cash as preferred methods of consumer payment. For retailers and business owners, it's important to understand the data contained on each of these cards, including bank identification numbers (BINs).
What is a BIN number and what information does it contain? This piece will discuss everything you need to know about BIN numbers and how they affect your business.
What is a bank identification number (BIN)?
A bank identification number (BIN) is made up of the first four to six digits of your bank card number,
The BIN can also be found on various charge cards, prepaid cards, and certain types of gift cards.
A BIN number can also be referred to as an issuer identification number (IIN), as banks are not the only institutions that issue payment cards.
Bank identification numbers are part of a standardized numbering system developed by the American National Standards Institute (ANSI), the International Organization for Standardization (ISO), and other national standards bodies.
Bank identification numbers provide merchants with some basic information about the card itself, as well as the customer using it, which can be used to evaluate and assess credit and debit card purchases and improve both the sales process and the customer journey.
A BIN number enables merchants to accept multiple forms of payment and increases the efficiency of transactions. It can also be useful in preventing fraudulent transactions to track down lost or stolen cards.
BINs vs. bank identification codes
What is the difference between a bank identification number and a bank identification code (BIC)?
Though it's actually common to hear the two terms used synonymously, BICs are distinct. A BIC is a code of eight to eleven digits based on the standards of an international organization that is used to identify a financial institution during any global business transaction.
By contrast, a BIN identifies specific institutions involved in the distribution and use of payment cards. Their primary purpose is to help merchants evaluate the safety and reliability of card-paying customers.
What does a BIN tell a business owner?
You can find a surprising amount of accurate information through a BIN number. The bank identification number can tell retailers the following:
- The name of the issuing bank network or institution
- The name, address, and phone number of the bank that will transfer the funds
- The credit card brand (i.e., Visa, MasterCard, American Express, Discover)
- The card type (debit, credit, etc.)
- The level of the card (black, platinum, or business)
- Whether the address of the cardholder matches the address on file
- Whether the card issuer is in the same country as the merchant
Vendors rely on a credit card processing systems to process these transactions rapidly. BINs, alongside issuer identification numbers, can help businesses accept more payment types.
How do bank identification numbers work?
When a customer initiates a transaction, their card issuer receives a request to verify the purchase. BINs work by identifying the issuing institution that will receive this transaction's authorization request.
The card issuer will determine whether the card and the account are valid and if the customer has sufficient funds to complete the purchase. The authorization request can then be approved or denied.
This exchange of information takes place within a card processing system, and this point-of-sale design enables merchants to process multiple types of card payments and conduct business in their retail stores as well as online.
Benefits of a BIN
According to data published by Business Insider, purchases completed with a charge card are preferred over cash when "dining at a restaurant (75%), buying groceries (75%), or purchasing tickets for a sporting event or concert (77%)." If you're a business owner, BINs are an essential part of your day-to-day business. Here are just a few of the direct benefits offered by a bank identification number:
Accept more types of payment
BINs allow you to accept more forms of payment. Not only can your business accept debit and credit card purchases, but BINs empower you to process card payments from more than one issuing company.
Process more transactions
Thanks to your credit card processor, transactions take place with lightning speed, improving the customer checkout experience, and enabling you to process a higher volume of transactions on any given day.
Stay in compliance
BINs help merchants and the issuing party ensure that the purchase taking place is authorized and conforms to applicable laws, which might be particularly important for companies that do business internationally or are required to comply with established export laws.
Prevent identity theft
The security measures embedded in the BIN system prevent identity theft and other common forms of fraud.
During a transaction, your credit card processor can identify specific red flags, such as if the address provided doesn't match the customer's billing address.
The credit card processor can contact the issuing institution to verify that the card is being used appropriately and approve or decline the purchase accordingly.
Enhance your marketing strategy
You can use BINS and other card details to highlight purchasing patterns among your customers.
For example, you may discover that most of your customers prefer paying with Visa or that American Express cardholders tend to be your most high-dollar customers.
This information can allow you to create specialized promotions that target these specific card users. Alternatively, if someone uses a gift card, you might try to connect that user to your store's customer loyalty program to encourage future purchases.
Analyze chargebacks
Chargebacks occur when customers dispute charges on their bank or credit card statements, often because they don't recognize the charge. Business owners hate chargebacks, as they end up costing them money and possibly even jeopardizing their relationships with credit card companies. BINs allow you to track these chargebacks and determine whether a specific institution is causing a disproportionate number of chargebacks, allowing you to make the appropriate adjustments.
How to find bank identification numbers
The bank identification number is located on a financial institution's physical payment card.
For example, your bank card may contain a 16-digit number embossed on the front, though banks and other issuers are actually moving away from embossing and placing the number on the back.
Here's how to make sense of the first six digits of this card number.
Major industry identifier
The first number on your card is known as the major industry identifier or MII, and it identifies which type of institution issued the card. For instance, Visa and MasterCards are classified as financial cards, while a Diners Club card is classified as a travel and entertainment card.
Here's how your card's major industry identifier corresponds to several broad categories:
- 1: Airline cards
- 2: Airline cards and other future industry assignments
- 3: Travel and entertainment cards
- 4: Financial cards
- 5: Financial cards
- 6: Merchandising and financial cards
- 7: Gas cards and other future industry assignments
- 8: Healthcare cards, telecommunications, and other future industry assignments
- 9: For use by international standards bodies
To be clear, though, while the first digit corresponds to these industry categories, the first six digits together identify the specific financial institution that issued the card in the first place.
BIN: remaining digits
The remaining digits of a BIN make up your account number. Your account number also includes one (or more) "check digit(s)," sometimes referred to as a "checksum."
A checksum is keyed to a formula used to help determine whether a credit card number is valid.
BIN example
Here are some examples of BINs from today's most popular financial institutions:
- Visa: 4*****
- MasterCard: 51**** or 45****
- American Express: 34**** or 37****
- Discover Card: 6011, 622126-622925, 644-649, 65
- Diners Club: 36****
The remaining numbers in the examples above identify institutions as well as the type of financial payment cards used.
For instance, cards can be used for debit or credit, and they can occupy different levels, such as black, platinum, or business. Notice that the initial digits for each card brand correspond to the categories listed above. (And yes, American Express is classified as a "travel or entertainment card.")
How to protect BINs against fraud
Despite the specificity of this bank identification number, payment card transactions are not immune from fraud. There are common security threats that unique BINs were created for to protect merchants and consumers from fraud.
What is BIN scamming?
BIN scamming (or a "BIN attack") is a form of credit card fraud where perpetrators steal identities or card numbers directly from a bank, merchant, or consumer.
They will then use a stolen credit card number to impersonate a bank to purchase goods and services.
It's not uncommon for a criminal to call a cardholder directly, impersonating someone from their bank. They may claim that the account has been compromised or attempt to learn your BIN number by asking where your personal bank is located. You should never share your banking information with anyone, as banks are uniquely keyed with your BIN.
If a scammer knows where you bank, they can simply read you the first digit on your bank card and ask you to confirm the remaining digits.
Victims of this scheme may be more trusting, believing that the scammer must be from their bank, given they have insider knowledge in the form of the first few digits of their card.
What is BIN cloning?
BIN cloning is another type of fraud through which criminals illegally duplicate, resell, or otherwise misuse payment cards. Criminals can use advanced methods to clone data from magnetic strips and chip-based cards, allowing them to create clones or fake cards.
Protect against fraud
BINs are already designed to identify fraud cases at each transaction level.
Your card processing system will use a BIN checker to verify the details of each customer, such as whether the geographic location of their issuing bank matches their billing address. This check is designed to ensure that fraudulent transactions are identified before they can proceed.
Still, it's not possible to eliminate all forms of financial fraud. Be on the lookout for common signs of BIN fraud, which can include the following:
- High volumes of small transactions, especially from the same card type
- Multiple declines in a narrow timeframe
- Large numbers of transactions in a short timeframe
These signs often point to a scam artist making a considerable in-person or online purchase to test fake or cloned BINs.
If you ever receive a phone call from someone you believe to be a BIN scammer, you can report the telephone number to the Federal Trade Commission (FTC) through their website to have them run the fake BIN through a BIN checker and confirm the fraudulent act.
Envisioning the future of BINs
As technology evolves, BINs will continue to play a prominent role in consumer safety and commercial transactions. But as cards proliferate, BINs will likely evolve to reflect more card brands and card types. While 8-digit BINs are not presently uncommon, companies may adopt this format to accommodate new customers and an expanded set of services.
Merchants will likewise need to learn more about BINs and fraud protection. Getting on board with digital payment software now can help you stay ahead of the curve and be prepared for the future of electronic commerce.
Accelerate into the future of business
Technology can't guarantee your success, but it can sure make it easier. BILL offers a variety of business tools that can help you streamline your operations, get paid faster, and manage your financial processes.
