Merchants use BINs to process payments in several ways:
- Authorization: When a customer makes a purchase using a credit or debit card, the merchant’s payment processing system uses the BIN to identify the card’s issuing bank. The merchant’s payment processor sends a request to the card issuer to authorize the transaction. If the transaction is approved, the merchant can proceed with the sale.
- Fraud Detection: Merchants can use BINs to detect and prevent fraudulent transactions. If a customer’s card is associated with a high level of fraud or is not issued by a valid financial institution, the merchant’s payment processor may flag the transaction for further review or decline it outright.
- Data Analysis: BINs can provide valuable information about the types of cards used by customers, the geographic location of cardholders, and other demographic information. Merchants can use this data to improve their marketing efforts and tailor their products and services to better meet the needs of their customers.
- Processing Fees: Merchants may also use BINs to determine the processing fees they will be charged for accepting a particular card. Different cards may have different fees associated with them, and merchants can use BINs to identify the type of card being used and calculate the appropriate processing fees.
Overall, BINs play a critical role in payment processing for merchants by enabling them to identify the issuing bank of a customer’s card, detect and prevent fraud, and analyze transaction data to improve their business operations.