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Updated by 02.15.2024

Protect Your Finances: Bank Identification Numbers (BIN) and Fraud

What Is a BIN Number and How Does It Work?

A bank identification number (BIN), also called an issuer identification number (IIN), is a set of four to six digits found in financial payment cards, i.e., credit, debit, and charge cards. It identifies the financial institution that issued the card, allowing transactions to be associated with the card issuer. 

How they work: Every online purchase entails a two-step process; authorization and clearance. The BIN identifies which issuer (the bank or credit card company) should receive the request for authorization to determine if the account or card is valid and whether the purchasing amount is within the card’s withdrawal limits.

So, when customers make an online purchase, they enter their card details on the payment page. The card issuer then verifies if the card and account are valid and whether the purchase amount is available. 

Non-fraud protected BINs help financial institutions detect identity theft, stolen cards, and fraud. Without a BIN, the credit card processing system would be unable to determine the origin of the customer’s funds, and the transaction would not proceed.

Authorization processes happen swiftly behind the scenes. For many merchants, their payment processor handles BIN checks against BIN lists they manage or subscribe to.

What Is a BIN Number Used For

Using just the first few digits of the BIN/IIN, merchants can gain access to additional information beyond the issuing entity when cardholders enter their card details for an online transaction such as: 

  • The name, address, and phone number of the bank funds will be transferred from
  • The card brand (Visa, Mastercard, American Express, etc.)
  • What type of card is it (debit, credit, prepaid, etc.)
  • What level the card is (black, platinum, business)
  • Whether the issuer is in the same country as the device used in the transaction
  • Whether the address provided by the cardholder matches the one on file

Finally, the BIN/IIN allows merchants to accept multiple forms of payment and speed up overall processing.

What Other Uses Do BINs Have? 

BINS also provides merchants with data about customer demographics, changing purchasing patterns, and chargebacks. BIN information helps determine which customers respond best to targeted promotions and discount offers.

For instance, a customer with a private wealth card has a higher purchasing power and may be more interested in high-end goods.

On the other hand, if a customer uses a gift card, it may indicate one of their friends or family members knows they are frequent purchases. In this case, sending information about a customer loyalty program could be a great way to generate more business.

What else is a BIN number used for?
The data from a bank identification code also reveals if an issuer grants a disproportionate number of chargebacks against your business or rejects your representment packages more frequently than other banks. This information identifies mistakes you’re making and helps you better tailor your representment to that particular issuer.

How Do You Find Your Bank Identification Number?

As we mentioned, the initial four to six numbers are your card’s bank identification number. The BIN indicates which card network and issuer are responsible for that card.

Major Industry Identifier (MII)

The numbers that appear first on your card are called the Major Industry Identifier (MII). They indicate the type of card you have. For example, the numbers 4 and 5 are usually for Visa and Mastercard banking and financial cards. The number 1 is generally for airline cards. The following three or five digits, known as the Bank Identification Number (BIN), tell you who has issued the card.

To give you a clearer idea of the industry designation of these numbers:

  1. 0 ISO/TC 68 and other industry assignments
  2. Airlines
  3. Airlines and other industry assignments
  4. Travel and Entertainment
  5. Banking and Financial
  6. Banking and Financial
  7. Merchandising and Banking
  8. Petroleum
  9. Telecommunications and other industry assignments
  10. National assignment

The remaining digits on your card that are not part of the BIN are your individual account identification numbers. The last digit is the Luhn check digit, a single digit generated with the Luhn algorithm and used to verify that the credit card number is legitimate.

Benefits of BINs

BINs expedite and improve the checkout process. When a card is swiped, the store’s payment processor reads the BIN and verifies the account with the card issuer. This legitimizes the transaction and follows any relevant national regulations.

  • Accept more types of payment: Not only can you handle payment from credit and debit cards, but they also let you process card purchases from multiple card issuers.
  • Process more transactions: Transactions happen quickly, creating a better shopping experience for customers and allowing you to handle more transactions in a shorter time.
  • Stay in compliance: BINs provide a way for merchants and issuing parties to check the purchase is legitimate and follows the necessary regulations, which is especially important for companies that operate across borders or must comply with export regulations.

What Is BIN in Scamming?

BIN scamming is a type of fraud in which criminals who know how to use bin numbers make unauthorized payment card transactions

The scammer obtains a cardholder’s bank identification number (BIN) to make fraudulent purchases online or in person using the credit or debit cardholder’s name. This type of scam is rife with the prevalence of online shopping and the ease with which BINs can be obtained.

It usually happens when a fraudster calls, impersonating someone from your bank, claiming your account information is compromised. Once you’re convinced, they’ll ask where you bank and attempt to confirm your card’s number.

What Is BIN Cloning?

BIN cloning is a form of identity theft where criminals use stolen credit card information to create counterfeit cards. This allows them to make purchases using the cloned card and fraudulently obtain goods and services or withdraw cash from ATMs.

The elaborate scheme works more or less like this:

  1. Criminals recruit an individual with access to credit cards, such as a cashier or restaurant server, to carry out their card cloning scheme.
  2. The accomplice is given a skimmer – a device used to capture card details – either a separate machine or an add-on to the card reader.
  3. The customer hands their card to the accomplice to make payment.
  4. The card is run through the skimmer and the normal POS machine.
  5. The card is returned to the customer, unaware it has been skimmed.
  6. Information gathered by the skimmer is transferred to a counterfeit card, which could be stolen.
  7. The counterfeit card can then be utilized as if it were a legitimate card, or alternatively, for further fraudulent activities such as gift carding and other carding.

Additionally, some criminals use skimmers on ATMs or handheld card readers. The skimmer captures the information stored in its magnetic strip when users swipe or enter their debit or credit cards. Additionally, the criminals may use shoulder-surfing or social engineering to obtain a card’s PIN or the owner’s billing address, allowing them to use the stolen information in various locations.

How to Protect Your Business from BIN Scamming or Cloning?

Adhering to safety standards can help businesses avoid several types of scams, but to be successful, all individuals with any kind of data privilege should stay alert. Below are a few tips to prevent fraud:

  1. Invest in EMV-enabled card readers: EMV-enabled card readers encrypt credit card data, making it difficult for fraudsters to scrape the needed data.
  2. Utilize Address Verification Service (AVS): AVS verifies the billing address associated with the credit card. If the address provided by the customer doesn’t match the address on file with the credit card issuer, the transaction can be denied.
  3. Implement additional security measures: Businesses should also consider implementing additional security measures, such as requiring additional authentication using a PIN or token, using multi-factor authentication, and monitoring transactions for suspicious activity.
  4. Educate employees: Educate employees to be aware of BIN scams and cloning and have them report any suspicious activity immediately.
  5. Monitor online activity: Monitor online activity to identify any suspicious activity and take steps to prevent fraud.
  6. Stay up-to-date with security protocols: Regularly review and update security protocols to protect your business from the latest threats.

Bank Identification Numbers: The Bottom Line

Every company needs a payment processor to accept payments from customers and process them securely, quickly, and reliably. It provides a secure gateway using BIN numbers and other methods to allow customers to pay for goods and services with their cards.

E-Complish is a Level 1 PCI Compliant payment partner that provides various payment solutions to organizations of all sizes and industries. Our services range from Text2Pay to MobilePay to DirectPay. We simplify the PCI Compliance process while decreasing costs and liabilities for financial departments.

 Get in touch with us to experience the difference our payment processing can make.

Amber Capece
Amber Capece
Amber comes to E-Complish with 12 years of experience in the Hospitality Industry. We are sure you are wondering how…