The use of credit cards is becoming routine in day-to-day e-commerce businesses. As a result, it is essential to understand everything connected to credit card use. One of the things to note is the Bank Identification Number. Every credit card has a Bank Identification Number (BIN). However, not all cardholders know what it is or its use. In most cases, even an online buyer needs to enter their credit card details, including the Bank Identification Number, to complete an online payment.
So, what is a Bank Identification Number, and how does it work?
This article discusses everything cardholders need to know about bank identification numbers (BIN), where they are on their credit card, and how they are used. It will also address the importance of a BIN.
What Is A Bank Identification Number (BIN)?
BIN is the acronym for Bank Identification Number. Like many financial instruments, the Bank Identification Number has its acronym or tag that makes it unique and a point of study. The Bank Identification Number or BIN is a combination of numbers that allows a cardholder or anyone else to check the financial institution that issued the card. Usually, the Bank Identification Number is a sequence of four or six codes uniquely generated on the credit card to identify a particular bank.
In order words, a Bank Identification Number is that number that is exclusively used by the financial institution that issued the card. No other bank has that kind of number combination. This is one of the unique ways that banks use to identify themselves in the ecommerce space. With the Bank Identification Number, you can check the card issuing bank. It should be noted at this point that almost all payment cards have their set of numbers you can use to identify their issuers. Credit cards, debit cards, prepaid cards, and other e-cards are all payment cards (they can be used for financial transactions).
Card Numbers Breakdown
On a credit card, there is a set of numbers arranged. The Bank Identification Number is usually between the first four and six digits, depending on the issuing bank. The first digit on the card (part of the BIN) is the Major Industry Identifier (MII). The MII shows the type or category of financial institution issuing the card. For instance, banking and financial cards use 4 or 5 as their MII, and Airline cards use 1. The remaining digits after the 6 BIN are the cardholder’s account number.
How A Bank Identification Number Works?
A Bank Identification Number is one of the ingredients required to complete an online purchase. For most online payment systems, authorization from the payment card is needed. This means that the payment process needs to determine the card the user wants to use to complete the purchase. A page asks the purchaser to fill in their card details, including the BIN. The BIN immediately identifies the card issuing bank to determine the card’s validity and whether it is active to make the purchase.
The user only needs to input the card number in the space provided. The authorization is run almost immediately. All details about the card; the bank or credit card issuer, card brand, type of card, and card validity are automatically confirmed.
Benefits Of A Bank Identification Number
The Bank Identification Number was developed by the American National Standard Institute (ANSI) and the International Organization for Standardization (ISO). The purpose is to identify the financial institutions that issue payment cards.
The following are the benefits a Bank Identification Number offers:
- BIN helps avoid card or purchase errors. The authentication process confirms that the cardholder is using their card, the card type, and the issuer.
- It makes the checkout process smoother and error-free.
- BIN validates the card being used by the holder.
- It shows who the purchase is, offering a chance to confirm card details.
- A Bank Identification Number automatically brings all card details and saves purchase time.
- It clears errors for a secured payment process.
How To Use A Bank Identification Number?
There is no unique way to use a Bank Identification Number. BIN validates the card issuer, card details, and purchases during an online payment. It secures the payment being processed. When the BIN is entered, a request is sent to the issuing institution to access the account’s money to make payment. By this, the bank verifies the account and confirms if the account balance is enough to make the purchase. The request is successful if all boxes are ticked and the money is deducted. Otherwise, the transaction will be denied.
About Bank Identification Number Scamming
The BIN is a security measure all cardholders should protect. BIN scamming is how fraudsters get a card’s BIN for fraudulent transactions. This happens when a fraudster calls to inform the holder about their card details and asks for the card number (BIN). Once they get the BIN, they request confirmation of other information like the CVV (three digits at the back of the card).
Why Use A Bank Identification Number?
A Bank Identification Number helps the cardholder to prevent unauthorized access to their account. Since every card has a unique combination of the BIN and the account number, it is difficult for another person to use. The BIN helps identify the financial institution or card issuer and card details and confirms the availability of the card to complete the purchase. Cardholders need to protect their card’s BIN against theft and fraud. The BIN, like other banking data, should be confidential.
