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“It’s kind of a BIN deal”

Surprise: You may not own your Bank Identification Number

“It’s kind of a BIN deal”

In context of today’s electronic banking world, one could conclude that your single most important asset is your BIN number. Yes, it is a “BIN deal” and one you should really pay attention to.

The BIN, used on credit and debit cards, is the Bank Identification Number. The first four numbers on the card identifies your card brand such as American Express, Discover, MasterCard or Visa. The next series of numbers identifies the financial institution and the numbers needed to process the transactions and post them to the account of your customer.

The BIN information along with other import information is encoded on the magnetic stripe found on the back of the card. When the stripe is swiped, the information is merged with the purchase transaction or ATM withdrawal at the Point of Sale of ATM and electronically sent to your institution for processing.

The BIN, in an electronic banking world represent the keys to the kingdom. Going forward, there is a tremendous amount of work a financial institution needs to do in preparation for the transition to EMV. Owning your BIN is fundamental, and will place your institution in control of your destiny.

Here’s a news flash for you. There are a large number of financial institutions that do not realize that they do not own their BIN. That’s right… it is shared BIN with other financial institutions. Processors use co-mingled BINs as a common practice until a customer requests a unique BIN. More importantly, even if you have a unique BIN, you still may not own it.

If you don’t own your BIN, when you decide to leave your processor, you will need to re-issue cards and with EMV on the horizon, this can mean tens of thousands of dollars in cost for a community financial institution.

So, your first step is to determine if you own the BIN. How? Call your card processor.

Second step, if you don’t own your BIN, develop a plan to move away from a shared or co-mingled BIN immediately. This can be done in a measured and affordable way.

Warning: if your vendor asks your institution to sign a contract extension in exchange for moving from a shared BIN to an owned BIN, I would strongly challenge that position. It is not necessary to extend your contract.

Next, just owning your BIN is not enough. It is a good first step, but you still have work to do to be ready for EMV. The BIN is the starting point. Where are you?

The Wombat!           

Dan Fisher

Dan Fisher is president and CEO of The Copper River Group, a consulting firm headquartered in Fargo, N. D., that focuses on technology and payment systems research and consulting for community financial institutions. For nearly 30 years, Fisher has worked in the financial industry using technology to improve the bottom line. He was CIO of Community First Bankshares (now part of Bank of the West), has served as a director of the Federal Reserve Board of Minneapolis, the chairman of the American Bankers Association Payment Systems Committee, and was a member of the Independent Community Bankers of America Payments Committee. Fisher has written numerous articles on banking technology and the payments system. He has authored or co-authored six books and recently published a book titled, "Capturing Your Customer! The New Technology of Remote Deposit." You can contact Fisher at dan@copperrivergroup.com.
P.S. To understand Dan's nickname, check out "About the Wombat" on his website.       

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