What is a BIN in Banking & Its Purpose?

I’ve always been curious about the numbers on my cards. Now I know what they mean — and for merchants, understanding BINs is critical.

We’ll explore what BINs are, how they work, the different types, and why they matter.

Let’s start with what a BIN is.

Key Takeaways

• Cardholders don’t need to know what BINs are for anything.
• A BIN is the first 4 – 8 digits of a payment card.
• BINs help validate transactions, prevent fraud, and identify issuers.
• Types of BINs include retail, commercial, shared, and dedicated — each serving different needs.
• BINs are different from BICs, which identify banks for international transfers.

Using BINs is a great fraud prevention method to avoid chargebacks. If chargebacks are still an issue, consider using chargeback alerts. They can help stop disputes before they escalate.

Learn how they work.

What Is a Bank Identification Number?

A bank identification number (BIN) is the first 4 – 8 digits on a payment card. These numbers identify the issuer and validate transactions. Every credit, debit, and prepaid card has a unique BIN.

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The BIN system, created by ANSI and ISO, ensures that payment networks:

• Route transactions correctly.
• Minimize errors and delays.
• Process payments securely and globally.

This system makes it easy for cards issued in 1 country to work anywhere in the world.

Curious about how BINs power your everyday transactions? Let’s explore what they’re used for.

Side note: BINs are also called Issuer Identification Numbers (IINs) because not all cards are issued by banks.

Glossary:

• ANSI: American National Standards Institute. Creates standards for technology in the US.
• ISO: International Organization for Standardization. Promotes global standards to simplify trade.

Summary:  A BIN (or IIN) is the first 4 – 8 digits of a card number. It identifies the issuer and ensures secure, seamless global payments.

What Is a BIN Used For?

BINs are typically used for the following:

• Tracking chargebacks: Spot trends and reduce losses from high-risk issuers.
• Authenticating the user: Verify identities and detect suspicious transaction patterns.
• Streamlining payments: Automate payment processing for faster, error-free transactions.
• Tailoring payment strategies: Offer localized options like currency conversion and language preferences.
• Detecting fraud: Identify anomalies in issuer location or transaction details to prevent fraud.
• Identifying the card issuer: Determine the bank and card type to ensure smooth transaction routing.

Most of these functions are straightforward. The next sections will explain how BINs support these critical processes in greater depth.

Let’s begin with chargeback prevention.

1. Tracking Chargebacks

By analyzing BIN data, merchants can spot fraud patterns and identify risks in transactions. This helps businesses take targeted actions to minimize losses.

For example:

If a BIN shows that a card was issued in Canada but the shipping address is in India, it might indicate potential fraud. In such cases, merchants could request extra verification from the buyer. Doing so confirms the transaction's legitimacy. Preventing a possible chargeback.

BIN data is also essential for high-risk management strategies. Some merchants automatically decline transactions from BINs linked to high-risk issuers. Such users could have committed chargeback fraud.

As Visa transitions from 6-digit to 8-digit BINs, it’s critical for merchants to update their systems. Without this adjustment, fraud detection and risk management tools could become less effective. Leaving businesses vulnerable.

I’ve mentioned chargebacks a lot — why are they so important?

Chargebacks cost businesses in extra fees and damaged relationships with payment processors. If you want to dive deeper into how to minimize chargebacks, check out our detailed guide for actionable strategies.

Part of how BINs protect against fraud involves authenticating the user.

2. Authenticate the User

BINs provide merchants with detailed information about the card and its issuer. By using BIN data, merchants can spot suspicious activity and take action to protect their business.

When a customer uses their card, the payment processor scans the BIN and routes the transaction to the issuing bank for authorization.

A BIN offers merchants specific details that go beyond basic account verification, including:

• Issuer and issuer category: The financial institution and its classification (e.g., bank, credit union).
• Cardholder’s bank info: Name, address, and phone number, which merchants can use to resolve disputes or verify details.
• Credit card brand: Shows the network (e.g., Visa) to confirm the merchant accepts the card type.
• Card level: Indicates if it’s a personal, platinum, corporate, or business card.
  • Each may come with different fees or benefits.
• Card type: Credit, debit, or prepaid cards.
• Card number length: Confirms the number format matches its type, reducing processing errors.
• Issuer country: Reveals where the card was issued.
  • Helps merchants verify if a purchase aligns with typical usage patterns.

BINs help route transactions to the right place, ensuring funds are drawn from the correct account.

Let’s say a merchant selling high-value goods notices a platinum card is used in a transaction. They can use BIN data to confirm the card matches the customer’s profile. This adds trust and credibility to the purchase.

Check the previous section for an example on how BINs can help merchants take action against fraud.

BINs do more than prevent fraud, though.

3. Other Tasks

When a transaction starts, the BIN and IIN identify the issuing bank. They tell the payment gateway, processor, acquirer, and card network where to route the request.

After identifying the issuing bank, BINs help with:

• Address verification (AVS): Confirms the billing address matches the one on file.
• Authorization request: Checks if the account is active and has enough funds or credit.
• Processing the payment: Withdraws money from the customer’s account.
• Transferring funds: Moves the payment to the merchant’s bank account.

Without BINs, transaction steps like verification and fund transfers would take much longer and involve more mistakes.

Accurate BIN identification streamlines payments, ensures security, and reduces errors. It’s a key part of fraud prevention and efficient payment processing, helping businesses avoid delays and revenue loss.

Let’s break down how BINs power your transactions.

Parts of a BIN: How to Identify One

A BIN (Bank Identification Number) is made up of several parts. Each serving a specific role in identifying and processing card transactions:

• Major Industry Identifier (MII): The first digit categorizes the card’s industry (e.g., banking, travel).
• Issuer Identification Number: Identifies the issuing institution, card type, and status.
• Rest of the card: Includes the Primary Account Number (PAN) and the checksum.

All payment cards — debit, credit, gift cards, charge cards, electronic benefit cards, etc. — have a BIN. Typically on the front of the card.

It’s printed or embossed and may also appear on the back. The first digit indicates the MII. The first digit shows the MII, while the following digits indicate the issuing institution or bank.

When a customer makes an online purchase, they enter their card details on the payment page.

The BIN — the first 4 to 8 digits — allows the retailer to detect which financial institution issued the card.

Side note: Since 2022, Visa and Mastercard BINs have expanded to 8 digits. A shift other card networks are expected to adopt.

The next sections will break down each part of a BIN in detail and show how these components work together.

Let’s begin with MII.

1. Major Industry Identifier

The first digit of the BIN is called the Major Industry Identifier (MII). It identifies the card’s issuer and the industry it belongs to.

Here’s what each MII means:

There’s a bit of nuance to the above numbers in relation to how to identify card issuers:

• Visa: Starts with 4 (e.g., 4*****).
• Mastercard: Starts with 51 through 55 (e.g., 55*****).
• American Express: Starts with 34 or 37 (e.g., 37*****).
• Discover: Starts with:
  • 65;
  • 6011;
  • 644-649; or
  • 622126-622925.

While the MII starts with a single digit (like 4 for Visa), some issuers add additional identifiers. For instance, Mastercard uses 51 instead of just 5. These number patterns help distinguish between card types and issuing institutions.

What do the rest of the digits tell us?

2. Issuer Identification Number

The IIN is part of the BIN and typically includes the first 6 to 8 digits of a card number. These terms — BIN and IIN — are often used interchangeably because their functions overlap.

While "BIN" is the older term, "IIN" is more precise. Reflecting the broader adoption of 8-digit formats. The IIN is a subset of the BIN and reveals key details about the card. Such as the issuer, card level, currency, and more.

For a deeper dive into what the IIN can uncover, check out the “uses” section we covered earlier.

What about the other card numbers?

3. The Rest of the Card

Beyond the BIN, the remaining digits on a payment card uniquely identify the cardholder’s account and ensure secure transaction processing.

This portion consists of 2 components:

1. The Primary Account Number (PAN)

The PAN is the series of digits that follow the BIN.

These numbers are specific to the cardholder’s account and play a crucial role in transactions.

• Verify the account’s status (e.g., ensure it’s not lost, stolen, or closed).
• Check for sufficient funds or credit to approve a purchase.
• Process refunds back to the same account.

For example, when you enter details online, the PAN helps the payment system locate the correct account. Funds are then withdrawn or deposited securely.

2. The Check Digit (Luhn Checksum)

The last digit of a card number is called the Luhn check digit, or checksum. It’s calculated using the Luhn algorithm. A formula designed to catch errors when entering a card number.

Here’s how it works:

1. The algorithm performs a series of calculations on the card number.
2. If the result is divisible by 10, the card number is valid.

This process helps prevent simple mistakes, like typos, from disrupting transactions. The check digit is a final quality control step, ensuring the card number is accurate before the transaction can proceed.

What would a full card number look like?

4. Example of a BIN

Let’s break down the Stripe test card number 4242424242424242 to understand the role of a BIN and the other components of a card number.

1. BIN/IIN: 424242:

• 4: The MII shows the card belongs to the banking and financial sector (Visa).
• 424242: For a real card, this would point to a specific bank or card issuer (e.g., a retail bank).

2. Primary Account Number (PAN): 4242424242

This number is unique to the cardholder and ensures the transaction routes to the correct account.

3. Check Digit: 2

The final digit is the Luhn check digit, calculated to validate the accuracy of the card number.

In this example, Stripe uses this number to demonstrate compliance with the Luhn algorithm, ensuring that transactions process only with valid card numbers.

We’re not done, yet.

Types of BINs

BINs serve different purposes in the payment ecosystem. Here’s a quick breakdown:

• Commercial: Assigned to business or corporate cards.
• Retail: Linked to personal-use cards for consumers.
• Shared: Used by multiple institutions or entities to reduce costs.
• Dedicated: Assigned to one institution or entity for greater control.

We’ll explore the differences between these BIN types in the following sections, helping you understand their specific roles and applications.

Let’s start off with retail versus commercial.

1. Commercial vs. Retail

Target audience:

• Retail: Designed for consumers.
• Commercial: Designed for businesses.

Card features:

• Retail: Standard features for personal spending.
• Commercial: Business-focused benefits, like detailed reporting.

Usage:

• Retail: Everyday personal purchases.
• Commercial: Professional or organizational spending.

Fees:

• Commercial cards often have higher fees or interchange rates due to their advanced features.

Retail and commercial BINs securely route transactions and provide details about the card’s issuer and type. However, their key differences lie in their target audience and the features tailored to that audience.

Retail BINs are assigned to cards issued for personal use. These include debit, credit, and prepaid cards meant for spending like grocery shopping.

Commercial BINs are used for cards issued to businesses. These cards often include expense tracking tools, higher spending limits, and business-specific rewards. Commercial BINs are ideal for corporate or organizational spending.

Once you choose a commercial BIN, you’ll need to know whether it’s shared.

2. Shared vs. Dedicated

BINs can be shared or dedicated, depending on how they’re assigned and used. The difference is ownership and control.

A shared BIN is used by multiple organizations.

Smaller financial institutions or payment providers often share BINs because they:

• Cost less: The costs of obtaining and managing the BIN are split between all users.
• Are quicker to use: Don’t require a long application process.

There’s a caveat. You have less control.

If another organization sharing your BIN has high fraud rates, the BIN’s reputation may suffer. This could lead to merchants blocking transactions from that BIN entirely. Affecting everyone sharing it.

A dedicated BIN is assigned to one organization. Giving them full control over how it’s used.

With a dedicated BIN, businesses can:

• Set custom transaction rules and limits.
• Implement tailored fraud prevention measures.
• Avoid issues caused by other organizations.

Larger companies prefer dedicated BINs because they reduce risks like shared fraud liability. However, they cost more and the application process is more time-consuming.

Banks and payment issuers decide whether to use a shared or dedicated BIN based on their size, resources, and needs. Businesses don’t usually get to choose their BIN type directly. They must work within the advantages or limitations based on their provider’s decision.

How do you get a BIN number?

Here’s How to Get a BIN Number

The following sections will go over ways that non-bank companies can get a BIN number for their services.

1. BIN Sponsor

A BIN sponsor is a bank or processor that lets businesses issue cards using its regulatory approval and infrastructure.

Getting a BIN directly from a card network like Visa or Mastercard is hard. It requires a banking license, lots of money, and a lengthy application process. BIN sponsors make this easier by giving businesses access to pre-approved BINs. 

This option works well for companies that:

• Want to launch quickly: A sponsor helps businesses start issuing cards much faster.
• Don’t have a banking license: Sponsors handle the compliance, removing this barrier for startups.
• Need ready-to-use systems: Sponsors provide the tools to process and manage cards, so businesses don’t need to build their own.

The sponsor keeps ownership of the BIN. Businesses that partner with the sponsor can issue branded cards or process transactions.

The BIN can be shared (used by multiple businesses) or dedicated (used only by your company), depending on the agreement.

Let’s check out the other option.

2. Network License

A network license gives companies direct access to a payment network’s infrastructure. This lets them issue branded cards, process transactions, and manage cardholder accounts on their own.

Getting a network license isn’t easy.

Companies must meet strict requirements, including:

• Financial stability: Prove you have enough capital and a solid structure.
• Compliance and audits: Follow strict rules, like Anti-Money Laundering (AML) standards.
• Business differentiation: Present a unique plan targeting specific markets.
• Operational readiness: Show you have secure systems to handle transactions.

A network license is best for large-scale financial institutions. These include established fintechs. Or those offering services that require control over their card programs.

Smaller companies or startups? Partnering with a BIN sponsor or using shared BINs is usually a smarter first step. These options help you get started while preparing for a direct license in the future.

Before we finish, we should compare BINs to bank identification codes.

Bank Identification Code vs. Bank Identification Number

A BIC, or SWIFT code, is an internationally standardized identifier used for global payments. It ensures money is routed correctly between banks during cross-border transactions.

As you can see, both serve different purposes. BINs are for identifying issuers and for card purchases. BICs are for international wire transfers.

Quick note: BIC stands for Bank Identification Code.

That’s all, folks.

Wrapping Up

BIN numbers are a great way to check if a transaction is legitimate. With ongoing improvements in their security, they’re a powerful tool for protecting your business and your customers from fraud.

While BINs help prevent fraud, they can’t address all types of disputes. Especially in the realm of chargebacks. That’s where chargeback alerts come in. These tools notify you before a formal chargeback is filed. Giving you the chance to issue a refund and avoid costly disputes.

We offer chargeback alerts. Give them a try. See how they can save your business.