Bank Identification Numbers, or BIN codes, form a cornerstone of modern payment systems. These sequences of numbers, prominently displayed on credit and debit cards, hold vital information about the card issuer, payment network, and more.
For merchants, understanding BIN codes opens opportunities to identify patterns in transactions, detect unusual activity, and even manage payment disputes more proactively.
And if you’d like to put that into practice, our handy BIN code lookup tool will help you do just that.
What Are BIN Codes?
A Bank Identification Number (BIN) refers to the first sequence of digits on a payment card, ranging from four to eight numbers. These digits are foundational in identifying the financial institution or entity that issued the card, providing a way to route transactions correctly during payment processing.
BIN codes are also referred to as Issuer Identification Numbers (IIN), with the terms often used interchangeably.
The origins of BIN codes trace back to the standards established by the American National Standards Institute (ANSI) and the International Organization for Standardization (ISO). These systems were developed to organize and classify payment cards systematically, allowing for smoother financial transactions on a global scale.
The first digit of the BIN is the Major Industry Identifier (MII). The MII categorizes the industry associated with the card issuer, such as banking, travel, or healthcare. For example, Visa cards have an MII of 4, which indicates finance, while American Express cards have a 3, indicating travel.
The remaining digits in the BIN sequence provide detailed information about the issuer and the type of card.
The Role of BIN Codes in Payment Processing
BIN codes play a foundational role in the mechanics of payment processing, acting as a guide for routing transaction requests to the appropriate issuing institution. When a cardholder makes a purchase, the BIN is used to identify the card’s issuer and determine whether the transaction should be approved or denied.
BIN codes also provide detailed information about the card being used, such as:
- Card Type: Indicates whether the card is credit or debit.
- Card Category: Indicates special card categories such as prepaid, business, or platinum.
- Geographic Location: The country or region where the card was issued, which can help merchants identify potential issues with cross-border transactions.
By decoding this information, merchants and payment processors gain valuable insights, such as whether a card is likely to have sufficient funds or credit available, or if there might be risks associated with the transaction.
BIN Codes in Fraud Prevention
Fraudulent activity remains a persistent challenge in payment processing, and BIN codes are an integral part of strategies designed to combat this issue. By leveraging BIN data, merchants and financial institutions can identify suspicious transactions early in the authorization process and take appropriate measures to mitigate risks.
Identifying Geographic Mismatches
BIN codes help pinpoint the issuing bank's location, providing a critical data point for detecting potential fraud. For example, if a card issued in one country is suddenly used for a transaction in another, it may signal an unusual activity pattern. While there are legitimate reasons for such occurrences, they can also indicate stolen card details being used across borders.
Recognizing Fraud Patterns
By analyzing BIN data in conjunction with transaction histories, merchants can uncover patterns associated with fraudulent behavior. One example of this is a spike in transaction attempts from different cards with the same BIN.
Fraudsters sometimes exploit BIN information through a technique known as BIN attacks. In these cases, they use a known BIN code to generate possible card numbers using a computer program. These card numbers are then rapidly tested to see if they’re valid and either discarded or saved for later fraud.
To counteract this, merchants can implement simple fraud checks like AVS and CVV matching. These measures make it significantly more difficult for fraudsters to conduct BIN attacks.
When analyzing chargeback data, BIN codes can provide valuable insights that help businesses identify and address the root causes of chargebacks.
For instance, if a significant number of disputes originate from a particular card type, such as prepaid cards, merchants can request additional authentication for those transactions or require a clearer acknowledgment of terms and conditions. By understanding where chargebacks are coming from and why they occur, merchants can adjust their operations to mitigate future risks.
The payment card industry has traditionally relied on six-digit BIN codes to identify issuing banks and institutions. However, with the growth in global card issuance and the need for more precise identification, The International Organization for Standardization (ISO) introduced the eight-digit BIN standard.
The transition from six-digit to eight-digit BIN codes was initiated to address the growing demand for additional combinations of unique identifiers. With the rapid global expansion of digital payment systems and the proliferation of financial institutions issuing cards, the existing six-digit BIN structure has begun to reach its limits. Although not all possible six-digit BIN codes are in use, existing rules severely limit the number of codes available.
BIN codes are an integral part of payment systems, serving as a foundational tool for identifying card issuers and validating transactions. For merchants, BIN codes offer information that can inform fraud prevention strategies, improve chargeback management, and support operational decision-making.
The use of advanced technologies such as AI and enriched data services may lead to increasing relevance for these identifiers. By leveraging the full potential of BIN data, merchants can navigate the complexities of modern payment systems with greater confidence and precision.