How to Prepare for 8-Digit BIN (Bank Identification Number) Expansion

The payment of goods and services has become easier and faster due to technological inputs in the business and finance world. With the introduction of credit cards, customers can pay for goods from any location in the world. Also, most online merchants have adopted the credit card at their mode of payment.

With the adoption of credit cards, online merchants have increased their customer base. However, the credit card has vital numbers that make transactions possible. One of the vital numbers that are needed while transactions are carried out is the card number. The card number ranges from 16 to 19 on a typical credit card. The first six digits on the card are called BIN number .

BIN is an important number that performs vital functions during business transactions. While making payments with your credit card, the BIN number is used to verify the credibility of the credit card . The BIN list also gives information about the issuer of your credit card, the type of card, and many more. The BIN Number helps merchants get your payment for goods to become authorized and cleared by the bank or financial institution. As of April 2019, credit card issuers have resolved to increase the BIN digits from six to eight. Hence, there is a need to discuss all you need to know about preparing the 8-digit BIN number. Therefore, Today, I will be telling you all you need to know about preparing for the 8-digit BINs and the checklist for the credit union.

Why Increasing BIN Digit from Six to Eight

As said earlier, the BIN number is vital in all business transactions you do with the credit card. It also allows online merchants to accept various methods of payments like mobile and digital methods. That said, the BIN shortage facing banks and financial institutions was caused by the increasing demands of credit cards and new digital payment methods. Hence, MasterCard and Visa cards, which are the largest card networks, declared the plans to increase the number of BINs. The increment of the number from six to eight started since 2019 and will elapse by April 2023 . Once the 8-digit increase in BINs is implemented, all six-digit BIN will automatically increase by adding two numbers more . For instance, the digits will end with 00, 02, up to 99. When the transaction is carried out with your MasterCard and Visa card, the credit card will read eight digits instead of the usual six digits. With a six-digit BIN, you can generate one hundred different 8-digit BINs.

Ways 8-Digit Expansion Can Impact Credit Card Issuers

1. Licensing and Underutilization Costs

To date, issuers of credit cards pay licensing fees on all new BIN generated. An implication of this is that there will be an increase in the cost of producing one 6-digit BIN since the new 8-digit BINs will be automatically created . That said, issuers of credit cards are penalized for underutilizing BINs. This means that the 99 extra eight-digit BINs on each 6-digit BIN generated that were not used costs the issuers' extra charges .

2. Increased Risks of Misrouted or Incorrect Transactions

Studies and analyses have shown that the generation of additional BIN numbers can increase the chances of incorrectly or misrouting payment to online merchants with the credit card. Visa has pointed this out and also reported that cardholders would not have access to file for charge bark when incorrect payment or misrouted transaction takes place.

3. Administrative Challenges

One of the importance of BIN numbers is to monitor the detailed information of cardholders in the portfolio created with the credit union. When multiple BINs are generated, it can result in administrative challenges to the credit union. The administrative challenges include difficulty in monitoring credit card issuance, usage, and activation .

How Does Migration to 8-Digit BINs Affect Card Issuers

It has become pertinent that credit unions will migrate from 6-digit to 8-digit BIN. To begin the migration, the credit unions will work together with the card processors. Notably, each 6-digit BINs created corresponds to 1,000 eight-digit BINs . Hence, the credit card providers accept all unused 8-digit BINs. The credit union should not issue new BINs aside from those BINs that are currently in use. For instance, Visa will not work with all unaffiliated third-party institutions. Hence, they must put the generation of new BINs into check. This is because the unaffiliated third-party will not be granted direct access to the 8-digits migration testing environment. All clients that have engaged the services of unaffiliated third parties should promptly communicate any information about the migration testing. It should be noted that BIN migration will affect both the card-not-present and card-present channels . Also, there will be no impact on the token because Visa assigns a 9-digit account number instead of 6-digit BIN.

What Action Should Card Issuer Take

The actions you should take as a card issuer doesn't involve the users of the credit card. You must reassure them of financial safety and security. In this section, I will be discussing the actions you must take to avert any effect as a card issuer.

1. Identify the 6-Digit BINs Route

The first action you must take is to identify the areas where the 6-digit BIN is being used in your issuance system. These channels include reporting, billing, and enrollment forms. Once identified, all enrollment, reporting, and billing statements that display the 6-digit BINs must start displaying 8-digit BIN when the migration is effected. Also, identifying these areas will help you estimate the resources and costs needed to implement the migration and also have a detailed understanding of the impact the shift will have on your application and systems.

2. Deactivate Current 6-Digit BINs

Before the migration to 8-digit BINs is implemented, all unused 9-digits account that range within the current 6-digit BINs should be deactivated . They can work with the issuer processors and vendors to get the BINs deactivated. Once the deactivation is done, it becomes easier to manage the post-migration of the increased BIN pool.

3. Return Unused 8- digit BINs

After the migration to 8-digit BINs in April 2023, card issuers must return all unused 8-digit BINs to Visa.

4. Route Payment Process Via Right Channel

Once the migration is done on April 2023, all merchants and acquirers that routes and process transactions through the 6-digit BINs must route and process transactions with the Account Range Prefix . When they do this, they prevent all processing inconsistencies that should have occurred in their business transactions when customers make payments with credit cards.

5. Consider Your Primary Account Number (PAN) and Account Range Strategy

Before implementing the 8-digit BINs, you must consider the assignment strategies of your primary account number. For instance, if the credit union sets the random assessment of its primary account number to the 7th digit, you will have no choice than to reissue another card that accommodates the 8-digit BIN to the customer. If the account range strategy is used to streamline specific cards produced within your portfolio, you will get the numeric structures updated.

6. Develop Plans to Reissue Affected Cards

Regardless of the way your card issuance is structured, you will still need to reissue customers some credit cards. To keep your credit card user base intact, you can commence the production of these credit cards as fast as possible.

7. Interact With Your Partner and Vendors

Information is important when changes are carried out in any system. Hence, you must take this vital step by communicating and dialoguing with your business partners. These include the merchants, core processors, and other relevant third-party that rely on your services to perform smooth business transactions.

Steps to Migrating to 8-Digit BINs

To ease the migration process to the 8-digit BINs, the Visa will set up a testing environment for processors and issuers. Hence, credit unions can contact their processors to get their migration done as soon as migration starts.

Summary Preparing For 8-Digit BIN | A Complete Checklist

The table below summarizes the points to note on the actions credit card issuers must take to prepare for 8-digit BINs.

Wrap Up

It has become sacrosanct that the 8-digit BIN will be introduced before April 2023. hence, all credit unions must prepare ahead of the proposed migration. Today, I have discussed all you need to know about the migration and what must be put in place to effect smooth migration. Please read through to acquire concise information needed.