Bank Identification Numbers (BIN): The Backbone of Payment Processing

Have you ever wondered why credit card numbers are so long? There is actually a valid reason for that card number sequence. In reality, it is a code. Each section of numbers represents data about your card. You can read those digits to discover things like who issued the card, the industry category, or the card type.

With all that extra info, it is far easier to execute transactions. And as more and more people use their credit cards, we need straightforward ways to process payments. Without it, keeping track of the millions of daily credit card purchases grows far too complex (not to mention how it makes fraud detection difficult). To that end, the industry developed the Bank Identification Number (BIN) system.

Let's explore how BINs work and why they are crucial for safe payment processing.

What Are BIN Numbers?

A Bank Identification Number (BIN) is the first 4 to 6 digits of a payment card number. Those six digits serve as an identifier. Each institution has its own code, so the BIN provides you with data about the specific card issuer.  

All payment cards have BIN numbers. That includes debit cards, charge cards, or gift cards. They are not a random sequence—The American National Standards Institute (ANSI) and the International Organization for Standardization (ISO) develop each BIN. Each organization ensures that all payment cards follow a consistent format.

Why do we go to all the trouble to build these identification codes? Because a global number system simplifies and secures how we communicate. A retailer can now read a standard code and match the transaction to the right issuer. That shared data system creates a consistent, rapid, and safe foundation for our electronic payments.

The Function of BINs in the Financial Industry

So how exactly do Business Identification Numbers help? BINs complete several key purposes in our transaction infrastructure:

Identifying the Issuing Bank

First, as stated before, the BIN primarily serves to determine the issuing institution. This takes on the all important function of authorization.

For example, as a customer inputs their credit card, you (the retailer) can scan the BIN. If the BIN exists, it will provide account data. Data confirmed by the system helps you validate the card issuer.

Each payment card has its unique identifier code. They start with well-known naming formats:

If the BIN does not exist, you are likely working with a false card. By confirming the identification numbers, you can ensure you are executing a legitimate, correct transaction. Accurate identification means secure authorization.

Determining Card Type and Network

Second, a BIN also provides a wealth of secondary card data. This extra data further assists with secure transaction processing.

For example, the first number of the identification sequence is known as the Major Industry Identifier (MII). The MII identifies the type of issuer by industry. The BIN for Visa always starts with a 4 since it falls into the MII category for banking and financials. Airline cards are part of MII category 1, while gas cards start with 7.

In addition, the combination of each number (their range and length) indicate other supporting info. You can use that data to identify things like the country and network type.

Common data associated with a BIN includes:

• The name, address, and phone number of the customer’s bank account
• The card brand
• The card level
• The country of the issuing bank
• location of the transaction

Retailers can use these insights to support accurate transaction execution. Every country and card network has its own processing rules— so the more data you have, the easier it is to properly label and complete each transaction.  

Facilitating Transaction Processing

Third, data collected from a BIN helps route transactions to the correct payment processor. This is crucial if we want to attain system efficiency.

Consider a customer who purchases a product at your store with a domestic, chip-based Mastercard. You also have a Mastercard-enabled Point-of-Sale system. What's the best routing path?

Luckily, the BIN offers you the answer. Since both you and the customer use Mastercard in the same region, an “on-us” transaction is ideal. Why use an outside network when you can keep things in-house? Mastercard can save any fees and labor with an internal route.  

As a result, it's easy to earn authorization. The data supplied by the BIN lets you select the best path, and that speeds up processing. More importantly, your customer walks away with an easy and rapid purchase.

Enhancing Fraud Prevention

Fourth, BINs play a vital role in fraud prevention. Identification numbers create a structured way to organize data, and that makes it far simpler for everyone to flag possible cases of fraud.

Consider a consumer who tries to use a gift card for a recurring subscription. Eventually, the card funds will run out, leading to a possible case of mistaken fraud (card not used for intended purposes). But with card-type data collected from the BIN, you can reject such cards before the transaction even occurs.  

Or think of someone who tries to use a stolen credit card. Even if they attempt to “confuse the system” and use the card in a foreign country, BIN numbers contain geographic data. A random purchase from Europe made by a longtime American client hints at fraud. With that info, you can request extra data from the customer to ensure it is a legitimate purchase.  

In short, a BIN offers the data needed to catch criminal activity. From card holder Blacklists to more advanced velocity checks, global data systems help protect the entire industry.

Ensuring Compliance and Regulation

Lastly, BIN numbers are a helpful aid with compliance. As you well know, credit cards involve sensitive customer information. That means all industry players must follow strict rules to protect all payment card data.

Think of a cross-border purchase. A European customer wants to buy a product from your store in America. Both Europe and America have their own security rules. But with a BIN number, it is easy to identify the foreign card issuer. Now you can follow and adapt the transaction according to the relevant national laws. For example, in this particular case you would be subject to Strong Customer Authentication (SCA) according to Europe's Revised Directive on Payment Services (PSD2)

Together, compliance helps everyone build a structured approach to security. BIN numbers become the simple way you can navigate these all-important regulatory frameworks.

Conclusion

Clearly, BINs play a pivotal role in the financial ecosystem. And the world continues to shift to a digital environment—that means BINs will only take on greater importance. Even now, we will soon run out of available codes with the growth of fintech (the ISO is already moving to an 8-digit system). That's without mentioning the increasing sophistication of fraudsters, which is yet further proof that we need the secure transaction processing BINs provide.

Such growth in payments will require action by you, the retailer. Expect more data security measures for PCI-DSS compliance in the future. Storage requirements will likely expand to meet the increase in payment accounts and BIN length. And you will most likely need supporting fraud tools to protect against scams that attempt to steal BIN data.

Awareness is half the battle. If need be, contact a professional to improve your transaction security. You can also find more technical details and educational resources at our knowledge center.  

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