Bank Card Numbers

Bank Card numbers

Have you ever thought why most of the time a bank card number is of 16 digits?

Have you ever observed Visa card numbers always start with 4 and MasterCards with 5?!?

Have you ever tried to know whether a card number is valid or not?

Do you know a card number can actually show you what product it is and which bank issued that card?

Every Payment Card (Bank Card) is assigned with a number called Bank card number (also called as Payment card number) by the banks.

Bankcard number actually consists of three parts,

·         BIN (Bank Identification Number) or IIN (Issuer Identification Number) – the first 6 digits of a card number (Allocated by American Bankers Association to Issuers)

o   First digit of the BIN is called as MII (Major Industry Identifier) – Digits 2, 4, 5 and 6 are assigned

·         Individual Account Number (Allocated by Issuing Banks
·         Check Digit (calculated using Luhn’s Algorithm) 

BINs can be used to identify the Issuer Bank, Issuer Bank’s Country, Interchange Association of the Card and the Product type. For example, BIN 405028 in this card identifies the card issuer as ‘HDFC Bank’, Country as ‘India’, Interchange Association as ‘VISA’ and Product Type as ‘Platinum Plus’. By Identifying the Country Code, billing currency can be identified.

Major Industry Identifier (MII)	Industry Category
0	ISO/TC 68
1	Airlines
2	Banking/Financial Institutions
3	Travel and Entertainment
4	Banking/Financial Institutions
5	Banking/Financial Institutions
6	Banking/Financial Institutions
7	Petroleum
8	Telecommunications and Health Care
9	National Standard Bodies

These numbers are assigned as per the ISO/IEC 7812 standards which define the numbering system for the identification of issuers of cards that require an IIN to operate in an international interchange environment.

ISO/IEC 7812-1:2006 Identification cards - Identification of issuers Part 1: Numbering system

Link: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=66011

ISO/IEC 7812-2:2007 Identification cards - Identification of issuers Part 2: Application and registration procedures

Link: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=66012

Registration of BINs

Issuers need to fill the application forms with all details of the industry category (to assign a MII), intended use of the IIN (Debit card, Credit card, ATM card, etc.,) and submit it to Sponsoring Authority of the nation. Sponsoring authorities are the members of ISO.

For example,

·         BIS - Bureau of Indian Standards

·         ANSI – American National Standards Institute

·         BSI – British Standards Institution

These Sponsoring Authorities will validate the information provided by the applicant for the compliance of application with ISO/IEC 7812 standards and if approved, forward the application to Registration authority. In case of the application being rejected the sponsoring authorities will write to applicant explaining the reasons for which the application has been rejected and help the applicant in appealing process.

Once the application is received the registration authority assigns a BIN from appropriate MII and makes an entry in the ISO register of card issuer identification numbers.

Luhn’s Algorithm - Check Digit

Luhn’s Algorithm (also called as Modulus 10 algorithm) created by IBM scientist Hans Peter Luhn is a checksum formula used to validate verities of identification numbers. This algorithm is helpful in distinguishing the valid numbers from incorrect or mistyped numbers.

US Patent link: http://www.google.com/patents/US2950048

Usually the check digit is appended to the end of the number to make it a complete identification number. The check digit can be calculated as below,

·         Double the alternative numbers starting from the number beside check digit (moving from right to left).

·         If the number is a double digit number after doubling operation, add the digits of the product.

Card Number	4	2	6	8	2	8	0	0	1	2	3	4	5	6	7	X
Doubling	8		12		4		0		2		6		10		14
Sum	8	2	3	8	4	8	0	0	2	2	6	4	1	6	5	X

·         Sum up the products,

Sum = 8+2+3+8+4+8+0+0+2+2+6+4+1+6+5 = 59

·         Subtract the unit digit from 10,

Check digit = 10- 9 = 1

Credit Cards

These cards are issued by banks or financial institutions to customers using which they can make purchases or withdraw money in advance for a credit. The credit limit offered to the individuals may vary between person to person based on their spending capability. The total transaction amount can be paid in full (Payment Due) or partial (Minimum Payment Due) once the bill is received for the month. Usually customers get certain period (~20 days) to pay the due as a grace period and if the due is not paid within the grace period, certain fee and interest would be added to the due amount.

Once the application is received from a customer, the banks screen the application and arrive at a credit score. The credit limit and the card product which is offered to the customer will be determined based on the credit score. Normally the applications are forwarded to a Credit Information Company (CIC) which screens the application to arrive at the credit score. For example,

- CIBIL - Credit Information Bureau (India) Limited

- Equifax

- Experian
- TransUnion
- ICS - Iran Credit Scoring
- Creditinfo

There are different types of credit cards based on the features like a Co-branded card or an Affinity card. The option of paying the minimum due introduces us the concept of Revolving Credit. Loyalty points can be accrued for every transaction and the same can be redeemed to get Gift Vouchers, Air miles, Gifts, etc.

Features:

·         Can make a purchase even when the customer’s bank account is out of balance

·         Buy now and pay later

·         Option to pay a minimum amount as due

·         Rewards on every transaction (Loyalty)

·         Balance transfer

Note:  The concepts of applying for a credit card, credit scoring, printing of cards, revolving credit, different types of credit cards, loyalty and fee related to transactions will be explained in upcoming posts.

ATM and Debit Cards

ATM Cards:

These cards are issued by banks or financial institutions that can be utilized by cardholder to withdraw cash from an Automated Teller Machine (ATM) or to avail other non-financial services (like a Balance Inquiry or an ATM PIN change, etc.,) in an ATM machine. A secret PIN is issued along with the card to enhance the security of the transactions which can be changed by the cardholder. The secret PIN has to be entered in all the card related activities.

An ATM card is always linked with a savings bank account and the amount is getting transferred from cardholder’s account (Issuer Bank) to Merchant’s account (Acquirer bank). ATM withdrawals can be made till the available balance of savings account is exhausted. The daily limit for ATM withdrawals is determined by the Issuer banks and it differs between banks.

Most of the banks now issue ATM cum Debit cards.

Features:

·         No need to carry cash

·         No need to visit the bank to withdraw money

·         Can withdraw money at any time (even on bank holidays and other than office timings)

·         Can be used at ATMs of the bank which issues the card and any affiliated bank

Debit Cards:

These cards are issued by banks or financial institutions that can be used to make purchases from any merchants or institutions through Point of Sale (POS) machines, to make purchases from any merchants through web sites (E-Commerce), to make cash withdrawals at ATM machines and other non-financial transactions at ATM and POS terminals.

A Debit card is always linked with a savings bank account and the amount is getting transferred from cardholder’s account (Issuer Bank) to Merchant’s account (Acquirer bank). Purchases/withdrawals can be made till the available balance of savings account is exhausted. The daily limit for purchase/withdrawals is determined by the Issuer banks and it differs between banks.

Features:

·         Can make purchases at stores without cash

·         No need to carry cash

·         No need to visit the bank to withdraw money

·         Can withdraw money at any time (even on bank holidays and other than office timings)
·         Can be used at ATMs of the bank which issues the card and any affiliated bank