Evolution of Payment Instruments

Decades back when people want to purchase some goods they go to the nearby shop and give hard cash to get the same. In 20th century there was a tremendous growth in technologies of all kind, so eventually payment industry also found its way to cope up with the pace in which the technologies evolve. Banks were computerized and People were introduced with payment cards through which they could make transaction which reduced the burden of standing in long queues to withdraw some bucks from an account. It reduced the risk of carrying cash to make transactions.

After some painful decades, at present we enjoy the luxury of carrying the cards easily to purchase anything-anywhere-anytime. As technologies evolve, now we have so many flavours of payment instruments like chip cards, contactless cards, wallets, mobile apps, etc. This blogger is created with the intention of giving as much possible information on all the possible sections of payment industry.



Sunday, January 17, 2016

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







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