What’s a BIN?
A bank identification number (BIN) is the first set of four-to-six numbers that appear on a credit card. The first number indicates the specific industry category. Visa card brands, for example, start with a “4” which means it exists within the banking and financial category.
The BIN is also the first step in the customer authorization process. It identifies which issuer should be contacted to verify that the amount of purchase falls with the card holder’s available limits. The BIN also plays an important role in card not present (CNP) transactions. Information provided in the BIN helps transactions flow smoothly and can help protect both merchants and consumers from fraudulent transactions.
The BIN allows the merchant to use the following information to identify cases on stolen cards or fraud by comparing the data obtained by the BIN to the card holder’s data. Here are some of the items that can be identified through a card holder’s BIN:
- The name, address and phone number the bank funds will be transferred from
- The card brand (Visa, MasterCard, Discover, American Express, etc.)
- The level of card the customer holds (Black, platinum, etc.)
- Whether or not the address provided by the cardholder matches the address on file
Knowing the BIN can be extremely beneficial, especially when looking at the type of card it is, debit/credit or prepaid. Different retry strategies for each these can be successful. For example, a merchant may find that submitting pre-paid cards at the beginning of the month, middle of the month or the end of the month might be better, depending on when the funds are being transferred onto the card. Debit cards can often behave similarly and have better authorization rates at the beginning and middle of the month. It’s important for merchants to test these theories to see which works best for them.
Merchants need to understand that each BIN represents a different group of customers that will behave differently depending on the products or services a merchant is selling. Merchants should also be aware that certain BINs can represent a riskier set of customers that will produce a higher number of disputes and fraud.
These percentages can negatively affect a merchant’s ratios and potentially land them in the card brand dispute and fraud programs. Knowing the make-up of your portfolio can help a merchant understand whether or not they need to work with third-party vendors to lower risk and identify these riskier customers before they could become a problem.