A Bank Identification Number is the first four to six numbers that come up on a credit card. This BIN helps identify the bank that has issued the card. Thus, it is quite important in the process of matching issuer of the card for the transaction.
Usually, the term Issuer Identification Number (IIN) can be used interchangeably with BIN. This numbering system assists in discovering the Identity Theft or any security breach by comparing data like the institution’s address and the cardholder’s address.
The concept of BIN was developed by the International Organization for Standardization to discover such institutions that issue cards. The first digit ascertains the Major Industry Identifier (MII) like banking or airline. And, the next five digits represent the issuing authority. For instance, the MII for VISA credit card begins with 4.
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The BIN immediately assists merchants in identifying the bank from where the money is being transferred, their phone number, address and if the bank is located within the same country as the device that is being used for the transaction.
Thus, whenever somebody purchases online, and enters the card details; after submitting the initial four to six digits, the retailer can easily detect the institution that has issued the card, the branch, the card level, card type, country where the issuing authority is situated amidst several other details.
Let’s take an example here. Suppose you purchased something online. Now, the moment you add your card details for payment, the BIN will identify the issuer that is receiving an authorization request for the transaction. And then, it will be verified whether your card is viable for making the payment or not. If the verification is done, the transaction will be approved; or denied otherwise.
Another example here could be – imagine that you are standing at a Petrol pump and swipe your card to make the payment. Upon this swipe, the system will scan the BIN to identify the issuing institution so as to withdraw the funds. Now, an authorization request will be put on your account. The approval or denial of this request takes place within a few seconds.
In the end, if there is no BIN on the card, there will be no determining of the customer’s funds origin, and thus; there will be no transaction.