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Also known as a BIN, a bank identification number is a numeric code that is used to associate various types of transactions with the bank or other type of financial institution that will ultimately be responsible for approving and completing those transactions. While the term is typically applied to numeric codes connected with banks, credit unions, or savings and loan associations, the same general concept is used with credit cards and bank debit cards. The exact configuration of a bank identification number will vary slightly from one country to the next, although in most cases the number will consist of six digits.
The main purpose of this number is to identify the bank or financial institution that will ultimately be responsible for completing a transaction that is initiated by a customer of that institution. For example, a bank identification number on a credit card allows the merchant’s card processor to know which bank issued the credit card, making it easier to connect with that bank and use the other data on the card to obtain authorization for the charge to take place. With modern technology, this process can take place in a matter of seconds, resulting in the charge being either approved or denied, depending on the status of the credit limit of the credit card account used for the transaction.
There is some variation in the actual length of a bank identification number. Increasingly, the standard for this type of institutional identification is six digits. There are systems around the world where the BIN is composed of four digits. Since financial institutions other than banks are using this approach more often, there has been some movement toward utilizing the term issuer identification number or INN as a more accurate description of how the number functions for a wider range of institutions.
A bank identification number is important to many different types of financial transactions. In addition to credit or debit card purchases, the number is also used in process various types of funds transfers that occur between different banking institutions. When accounts are moved from one institution to another, making use of the BINs associated with both the sending and the receiving bank is also important, in that the process ensures the funds are moved quickly and accurately. To an extent, a bank identification number offers some protection for consumers, in that many transactions cannot take place without including the BIN number. This means that identity theft is slightly more difficult to manage when this number is not readily available.
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