The world is increasingly embracing technology, and more and more people are opting for online transactions to buy coveted products and services. And as digital payment transactions continue to expand rapidly, fraudulent activities are also cropping up at an alarming rate. For this reason, stakeholders are coming up with ways to detect and prevent fraud. One diligent means of detecting and preventing online fraud is through BIN (Bank Identification Number) and IIN (Issuer Identification Number). The technology allows merchants to build a comprehensive view of their customers and avoid unscrupulous transactions that could erode their profits.
BIN is the short form for Bank Identification Number and it refers to the first four to six numbers inscribed on a bank-issued credit card. The BIN acts as an identification technique that helps the merchant to detect fraud. The Bank Identification Number uniquely identifies the type of card being used, the institution/bank issuing the card and the geographical location of the card issuer.
IIN (Issuer Identification Number) is used interchangeably with BINs. It refers to the first eight identification numbers that are found on cards, including those that are not issued by banks. Unlike the BIN, the IIN is only used to identify the card network instead of the cardholder. IINs can be found on institutions cards such as the American Express as well as virtual and prepaid gift cards such as Walmart, PayPal, and NetSpend.
The first digit of the card is dubbed as the Major Industry Identifier (MII), and it bears a particular significance on its own. It identifies the type or category of the institution which issued the card. For example, Visa and MasterCard-branded cards are classified as financial payment cards since banks primarily issue them. Other like American Express and Diner's Club are said to be travel and entertainment cards since this was their primary function when they were launched.
The BIN and IIN provide a way for online merchants to check if the information provided by a consumer is legit. It also helps identify if a customer's geolocation is similar to the issuing financial institution's origin country. Although this is not enough to indicate fraud, it is an excellent signal for identification. It can also be used to lower consumer data entry errors on checkout pages. BIN/INN helps to speed up the overall processing process, as well as allows merchants to accept multiple forms of payment.
Bank Identification Numbers and Issuer Identification Numbers provide merchants with plenty of other information besides the issuing entity. These include:
Making an online payment follows a two-step process: authorization and clearance. A BIN helps in authorization as it identifies the issuer of the card, the consumer's geolocation, type of card, and card category. Authorization takes place in the background as the numbers in a card are checked against a third-party BIN database.
BIN/IIN identification is a critical step to detecting and stopping fraud. For instance, let's consider an American customer purchasing a product from a French website. The IP address is coming from America, and the shipping address is to China. However, the BIN check shows that the institution that issued the card is in China; this should be a red flag for a merchant. Why would an American consumer have a Chinese card if they are buying from France? When faced with such a scenario, the merchant should seek further explanation. While BIN checks are usually done using third-party databases, RapidAPI boasts top BIN APIs to help merchants detect and prevent fraud.