In the payments industry, the Bank Identification Number (BIN) refers to the first six digits of a payment card number. The BIN serves as an identifier that provides information about the issuing bank or financial institution. Here’s how the BIN works:
- Card identification: When a payment card is issued, it is assigned a unique BIN that identifies the card’s issuing institution. The BIN is typically embossed or printed on the front of the card, along with the remaining digits of the card number.
- BIN database: Payment processors and card networks maintain a BIN database that contains information about each BIN, including the associated bank or financial institution, card type (debit, credit, prepaid), and geographic region.
- Transaction routing: When a cardholder makes a purchase or initiates a payment transaction, the merchant’s payment system reads the BIN from the card number and uses it to route the transaction to the appropriate payment network or processor.
- Identifying the issuer: The payment network or processor checks the BIN against its BIN database to identify the issuing bank or financial institution. This information helps determine the rules and regulations associated with the card, including the acceptance network, fraud detection mechanisms, and authentication requirements.
- Fraud prevention: BINs play a crucial role in fraud prevention. By analyzing historical transaction data associated with specific BINs, payment networks and processors can identify patterns of fraudulent activity, detect potential risks, and implement appropriate security measures to protect cardholders and merchants.
- BIN ranges and sub-BINs: BINs are organized in ranges allocated to specific institutions or regions. Large financial institutions may have multiple BINs assigned to different card programs or product types. Additionally, sub-BINs can be used to further categorize cards within a particular BIN range, providing additional information such as card level (e.g., gold, platinum) or cardholder segment.
- BIN validation: Merchants and payment processors can perform BIN validation to verify the accuracy and integrity of the BIN provided during a transaction. BIN validation involves cross-referencing the BIN against the BIN database to ensure it matches a valid and recognized BIN.
The BIN is crucial for routing transactions, identifying the issuing institution, and implementing fraud prevention measures in the payments industry. It enables efficient processing, ensures compliance with payment network rules, and helps mitigate risks associated with fraudulent activity.
It’s important to note that the BIN alone does not contain personal or account-specific information about the cardholder. It serves primarily as an identifier for routing and categorizing purposes. Personal and sensitive cardholder data, such as the account number, expiration date, and CVV, are found in the remaining digits of the card number and are treated with strict security measures to protect cardholder privacy.