What Are Bank Identification Numbers and Why Do They Matter?

Table of Contents

1. What is a Bank Identification Number?
2. Why are Bank Identification Numbers Important?
3. How do Bank Identification Numbers Work?
4. How Are Bank Identification Numbers Used?
5. Is the Bank Identification Number the same as the account number?
6. What Are the Additional Benefits of BINs?
7. What Is BIN Scamming?

Key Takeaways

• A Bank Identification Number (BIN) is the first 4-6 digits of a payment card, identifying the card issuer and its industry.
• BINs are crucial for detecting fraud. They trace transactions back to the card issuer and verify details like card type and origin.
• Merchants use BINs to process payments efficiently, authorize transactions, and comply with regulatory standards.
• BINs are essential for fraud prevention, helping to verify cardholder data and spot inconsistencies.
• Cardholders should be cautious of BIN scamming, a tactic fraudsters use to steal credit card information.

Bank Identification Numbers (BINs) are the first few digits on a payment card. They are crucial in identifying the issuing bank and ensuring secure transactions. Whether it's preventing fraud or speeding up payment processing, BINs are a critical part of how payments, from digital payments to B2B payments, work. In this guide, we'll explain what BINs are, why they matter, and how they contribute to secure, seamless transactions for both businesses and consumers.

What is a Bank Identification Number?

A Bank Identification Number (BIN) is a payment card's first four to six numbers. The first digit of this series works as the primary industry identifier, and the remaining digits signify the financial institution that issued the card. All Visa cards, for example, start with a four since this number identifies the banking and financial category. These numbers make it easy to trace cards and transactions back to the card issuer, and they can be found on credit cards, debit cards, charge cards, prepaid cards, and gift cards.

Additionally, BINs are sometimes referred to as Issuer Identification Numbers (IINs) because cards can be issued by institutions other than banks.

Is the Bank Identification Number the same as the account number?

A bank Identification Number (BIN) is not the same as an account number. A BIN refers to the first 4-6 digits on a payment card. This identifies the institution that issued the card and its type. By pinpointing the origin of the card, a BIN helps facilitate the payment process and detect fraud.

An account number, on the other hand, is a unique number assigned to an individual’s bank account. It’s used to identify and manage specific accounts for transactions like deposits, withdrawals, and transfers. While the BIN identifies the issuing institution, the account number identifies the specific account within that institution.

Why Are Bank Identification Numbers Important?

BINs can help detect fraud cases, such as identity theft or stolen cards because they identify the location of the card issuer, which bank issued the card in the first place, and the exact type of card being used. This information can be compared to cardholder data to help pinpoint fraudulent charges more accurately.

Additionally, BINs in B2B payments allow merchants to evaluate and assess their payment card transactions, enabling merchants to accept different payment forms and help transactions be processed more quickly.

How Do BINs Work?

The BIN system is used for global identification, and it will identify the issuer that authorization requests will be sent when a card is swiped or entered manually. It was created by the American National Standards Institute (ANS) and the International Organization for Standardization (ISO). The ANSI is a nonprofit organization that establishes business standards in the US, while the ISO is an international nongovernmental group that sets standards for different industries.

A BIN number is on every type of payment card. The number is embossed on the front of the card and also appears in print below. As we said, the first number in the BIN sequence signifies the primary industry identifier and the following numbers specify the issuing institution.

Customers who buy something online will enter their card information on the checkout page. After entering the first four to six digits of the card, the company that they are purchasing from can identify which institution issued the customer's card as well as the card brand, the card level (such as gold or platinum), the card type, and which country the issuing bank is located in.

When a customer initiates a purchase, the issuer receives the authorization request to verify whether the card and account are valid and whether the purchase amount is available. This results in the transaction being either approved or denied.

BINs are critical to the entire credit card processing system. They allow us to locate the origin of the customer's funds and fully complete the transaction.

How Are BINs Used?

BINs can be used in many ways, but their most important purpose is to enable merchants to analyze card transactions properly.

On top of this, BINs allow merchants to detect originating banks and whether these banks are in the same country as the device that enables the transaction to be completed. BINs also verify the address provided by the customer. As a result, BINs are critical when it comes to detecting and preventing fraud. The numerical system of BINs helps to accurately pinpoint identity theft and other security breaches by comparing and verifying information tied to the issuing institution and the cardholder.

While consumers don't typically use BINs themselves, it's still essential for them to know what BINs mean since they are an important part of authorizing transactions. When a customer purchases, the issuing institution receives an authorization request. This request helps verify the account's legitimacy and whether the funds are genuinely available to make the purchase.

What Are the Additional Benefits of BINs?

BINs are essential for increasing the speed and efficiency of credit and debit card checkouts. When a customer enters their card information at checkout, the retailer's payment processor immediately scans the cardholder's BIN and validates the account with the card issuer. BINs are also incredibly helpful in authorizing transactions and maintaining compliance.

What Is BIN Scamming?

BIN scamming is a way for fraudsters to steal credit card information. It usually involves a fraudster who is impersonating someone from a bank. The fraudster will call cardholders and tell them that their account information has been compromised and then give the cardholder some basic information to try to gain their trust. After that, the fraudster will provide the cardholder his BIN and ask him to confirm the remaining digits on the card – thereby making it easy to steal the cardholder's credit card information and any other information that might be needed to steal funds.

To protect themselves, cardholders must be aware of BIN scamming and other forms of credit card fraud. Above all, cardholders should never share their card information with anyone and keep their financial data private.

Bank Identification Numbers (BINs) are key to secure and efficient payment processing, helping businesses and consumers prevent fraud and ensure smooth transactions. To learn more about how digital payments can enhance your business operations, check out our free ebook: The Competitive Advantage of Digital Payments in Your Supply Chain.