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New issuing BIN number ISO guidance and industry adoption

The payments industry’s next “Y2K event” is right around the corner.
Is your organization prepared for 8-digit BINs?

In response to a sharp increase in the number of card issuers, the International Standards Organization (ISO) has announced an expected shortage of novel combinations for Issuer Identification Numbers (IINs), commonly referred to in the industry as the issuing Bank Identification Number (BIN). Revising their official guidance (ISO/IEC 7812-1), ISO is now calling for an expansion of the issuing BIN from six to eight digits. While the length of the primary account number (PAN) will remain variable (ranging from 10 to 19 digits) the issuing BIN change will require action across the entire payments industry, including banks, processors, fintechs, and the vendors who support them.

The parallels to Y2K are easy to draw. A widely used numeric is expanding by two digits, creating the need to first identify,  then address potentially wide-sweeping operational and technology impacts.

And while April 2022 may appear to be in the distant future, there is significant risk for payments organizations who fail to put an issuing BIN expansion plan in place now. Download the full report to learn more.

Visa and Mastercard recently confirmed their support of ISO’s revised guidance and plan to adopt the new standard in 2022. Both networks have stated that acquirers and acquirer processors will need to be ready to operate on 8-digit BINs. After April 2022, Visa will only issue 8-digit BINs. Mastercard will issue 8-digit BINs after April 2022, but has not set a date for discontinuing issuance of 6-digit BINs.

Mastercard has also announced that by 2022, issuers will need to enable account ranges, and acquirers should be ready to operate on 8-digit BINs and 11-digit account ranges.

Other major networks, including American Express, Diners Club/Discover, and China Union Pay, have not announced timelines for adopting the new 8-digit BIN.


Bank Identification Number Guide & BIN List

Table of Contents

  1. What is a Bank Identification Number?
  2. How Do you Find Your Bank Identification Number?
  3. BIN List
  4. How Do BINs Work?
  5. How Do BINs Fight Fraud?
  6. What Are the Other Uses of the BIN?
  7. Frequently Asked Questions

Many merchants, businesses, and consumers rely on credit and debit cards for daily transactions. But with the rising popularity of cards comes the increased risk of cases of fraud, which could spell disaster for merchants when chargeback ratios rise and profits plummet. Hence, security measures are put in place to protect all the parties concerned. 

The initial string of numbers on your card make up the Bank Identification Number (BIN), which can be used to identify the card’s issuing bank or institution. What do these numbers mean and what role do they play in business transactions? How do these numbers help merchants?

Here’s what you need to know about Bank Identification Numbers and their uses.

What Is a Bank Identification Number?

A Bank Identification Number or BIN number consists of the first four to six digits on a payment card. These numbers reveal information about what kind of card it is and what institution it is associated with.

Developed by the American National Standards Institute and the International Organization for Standardization, the BIN number can be found on credit and debit cards as well as prepaid cards, gift cards, etc. It is also commonly referred to as the Issuer Identification Number (IIN), given that banks are not the only institutions that issue these cards. It plays a crucial role in helping merchants during the process of matching transactions to the card’s issuer.

BINs provide accurate information about payment cards, such as the card type, the issuer’s industry, and the card’s brand. Each issuing bank has a unique BIN.

How Do You Find Your Bank Identification Number?

For this exercise, you might want to take a look at your credit card. 

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The numbers on your card aren’t as random as you might think. The first four to six numbers are your card’s Bank Identification Number. The first digit on your card is known as the Major Industry Identifier (MII), of which there are ten, ranging from 0 to 9.

For example, numbers 4 and 5 fall under the issuer category for banking and financial cards. The number 0 falls under ISO/TC 68 Assignment. Meanwhile, 8 is for healthcare cards and telecommunications. After the Major Industry Identifier, the next three or five digits under the BIN determine the issuing party. 

The rest of the numbers that don’t fall under the BIN are the individual account identification numbers. The last digit on your card is the Luhn check digit, a single check digit generated using the Luhn algorithm, which is used to quickly check if a credit card number is valid.

Issuing networkIIN ranges
American Express34, 37
Bankcard5610, 560221–560225
BMO ABM Card500, 5510
Canadian Imperial Bank of Commerce Advantage Debit Card4506
China T-Union31
China UnionPay62, 81


Diners Club enRoute2014, 2149

Diners Club International

300–305, 3095, 38–39
Diners Club United States & Canada54, 55
Discover Card6011, 622126 - 622925, 624000 - 626999, 628200 - 628899, 64, 65
HSBC Bank Canada Card56
Laser6304, 6706, 6771, 6709
Maestro UK6759, 676770, 676774
Maestro50, 56–69


NPS Pridnestrovie6054740-6054744
Royal Bank of Canada Client Card45
RuPay60, 6521, 6522
Scotiabank Scotia Card4536
Solo6334, 6767
Switch4903, 4905, 4911, 4936, 564182, 633110, 6333, 6759
TD Canada Trust Access Card4724
UkrCard6040, 6041
Verve506099–506198, 650002–650027


How Do BINs Work?

The Bank Identification Number provides necessary information, authorization, and security against fraud. 

Bank Identification Numbers help merchants identify and verify important transaction information such as the issuing bank’s address and phone number.

The BIN also facilitates faster transaction processing and allows merchants to accept different forms of payment. 

The BIN works by identifying the issuer that receives the transaction’s authorization request and whether or not the account is valid. It also works by determining if the account has sufficient funds for the transaction, which facilitates the approval or rejection of a transaction. These all work in the background during card-based transactions, and a credit card processing system cannot function completely without the Bank Identification Number. 

You can check the BIN code of a bank using an online database where you’ll find the credit card brand, type, issuing bank, and bank network, among other information. 

How Do BINs Fight Fraud?

The BIN is a useful tool that helps fight fraud and identity theft. 

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyBINs can be used by merchants to verify transactions and find any possible red flags. Aside from making the checkout process faster by minimizing errors, BINs add security to card-based transactions and card validation. They are used to analyze transactions and weed out suspicious transactions that are often done using stolen or fake cards and even by unauthorized card users. 

BINs can help identify the purchaser and confirm online validation. BIN data can also be used to protect merchants against fraudulent monthly installment transactions.  

You can use the information garnered from the Bank Identification Number to verify pertinent transaction data with the issuing party and even the cardholders themselves. This way, you can mitigate instances of fraudulent transactions.

Although the information garnered from a BIN is relatively basic, it can be used to flag certain potentially fraudulent transactions as suspicious. For example, a business in the UK receiving an order from a customer in Spain might not be all unusual, but if the BIN indicated that the card was issued by a Canadian bank, that might be reason to look at that transaction a bit more closely. Many fraud prevention tools will use the BIN, among other information, to detect potentially fraudulent transactions.

What Are the Other Uses of the BIN?

Aside from the above-mentioned uses of the BIN, it can also help merchants keep their chargeback ratios low. For merchants, having a low chargeback ratio is good for their reputation. Customers are more likely to feel secure in their transactions because of the additional level of security provided by the Bank Identification Number. This also acts as a good competitive advantage given the saturation of merchants in the international marketplace.

Added security measures provided by BINs also prevent the loss of money due to fraudulent transactions, giving merchants a higher likelihood of seeing an increase in profits.

For merchants, BINs provide insight into business trends as well. The Bank Identification Number lets you identify changes in purchasing patterns, like consumer demographics or card decline rates. 

You can also use BIN data to see the type of card that a customer uses and target tailored promotions and offers their way. Say a customer has a platinum card. This implies that they have higher purchasing power and may spend more than the average person. A well-thought-out offer or deal toward this demographic can potentially bring in more profit.

If a customer uses a gift card, on the other hand, that might indicate that one of their friends or family members knows that they purchase from you frequently, or suspects that they might be interested in doing so. Sending that customer information about your customer loyalty program could be a great way to secure their future business.

All in all, BINs provide an efficient and secure way of conducting transactions. With the changing landscape of the marketplace, whether physical or virtual, there is a need to adapt to emerging challenges, as well as the trends and systems that can facilitate an even more accurate, more efficient, and more secure way of transacting and doing business. 


What is a BIN checker?

A BIN checker is a tool used to look up BIN numbers and reveal the information they contain.

What can someone do with a BIN number?

A BIN number can be looked up using a BIN checker to reveal the bank that issued the card, the card type and brand, and other non-personal information.

What is BIN scamming?

Fraudsters can take a valid BIN number and generate potential strings of remaining numbers to test using small online transactions, trying to stumble upon a number that is in use.


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Bank Identification Number Search

“Bank Identification Number,” or BIN code, refers to the initial sequence of four to six numbers that appears on a credit card. The number is used to identify the card’s issuing bank or other financial institution.

The BIN number ties an issuer to all the cards it issues, and to all the transactions on those cards. At the top of this page, you can use our BIN number lookup tool and use the credit card identifier system to determine the issuing bank of (almost) any payment card.

In the rest of this post, we’ll take a closer look at these bank id numbers, what they mean, and how they may change in the future.

What Is a Bank Identification Number?

First, lets answer: what is a BIN? Like most industries, the payments sector is littered with its own slate of undecipherable acronyms and confusing argot. The BIN is a perfect example. What is it? How does it differ from an IIN? And what do all those numbers mean, anyway?

The BIN (or bank identification code) is a numbering convention developed to identify which particular institution issued a given credit card or other bank card, and what type of institution it is. It’s essentially the bank’s calling card; each card-issuing bank has a unique BIN.

To start, let’s look at the full set of numbers on the front of a typical bank card. This numbering system applies to credit/charge cards, debit cards, prepaid cards, and certain electronic benefit cards. For the purposes of this article, we lump them all together under the blanket term “payment card.”

Bank Identification Numbers

In this illustration, the first six digits are traditionally called the Bank Identification Number. It’s becoming more common, however, to use the term Issuer Identification Number, or IIN. This reflects an increasing number of non-bank institutions who opt into the BIN network. However, the terms IIN and BIN can be used more or less interchangeably.

Don't forget to try the bin checker tool at the top of the page to test for yourself. 

In either case, the number can vary between four and six digits, depending on the specific institution that issued the card. While using the first six numbers is the most common, it isn’t mandatory, and even that may change soon, as we’ll discuss later.

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The Major Industry Identifier

The first digit of the card number is the Major Industry Identifier, or MII, and it possesses a certain significance on its own. The MII identifies the category or type of institution which issued the card. Visa- and MasterCard-branded cards, for example, are primarily issued by banks, and so they are classified as financial payment cards. Diner’s Club and American Express are considered travel and entertainment cards, as this was their primary function at the time they debuted.

This chart spells out the MII codes by category:

MII Digit ValueIssuer Category
0ISO/TC 68 Assignment
1Airline cards
2Airlines cards (and other future industry assignments)
3Travel and Entertainment Cards
4Banking and Financial Cards
5Banking and Financial Cards
6Merchandising and Financial Cards
7Gas Cards, Other Future Industry Assignments
8Healthcare Cards, Telecommunications, Other Future Industry Assignments
9For Use by National Standards Bodies

To recap, when looking at the full bank card number, the first digit identifies the card issuer’s industry, while the first six digits collectively identify the specific institution which issued the card. The remainder of the 16 (or 15, in some cases) digits make up the cardholder’s account number, including one or more check digits, also called a “checksum.” A checksum represents the sum of a formula that helps determine if the credit card number is actually valid.

With the numbering combinations available, it is possible for each issuer to have about a trillion different account numbers for their cardholders.

How Bank Identification Numbers Help

The BIN/IIN provides merchants with a lot of other information besides just the issuing entity. For example, when cardholders enter card details for an online transaction, just those first few digits tell the retailer:

  • The name, address, and phone number of the bank funds will be transferred from
  • The card brand (Visa, Mastercard, American Express, etc.)
  • What type of card it is (debit, credit, prepaid, etc.)
  • What level the card is (black, platinum, business)
  • Whether the issuer is in the same country as the device used in the transaction
  • Whether the address provided by the cardholder matches the one on file

Finally, the BIN/IIN allows merchants to accept multiple forms of payment and speed up the overall processing.

Here are a few examples of the BIN format for the most widely-used card brands in the US:

Visa: 4*****

American Express (AMEX): 34**** or 37****

Diner’s Club: 36****

MasterCard: 51**** or 55****

Discover Card: 6011, 622126-622925, 644-649, 65


Bank Identification NumbersBank Identification Numbers

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Your Future Bank Identification Number

As the world shifts more and more toward a digital-reality, the role of the bank identification number will likely expand. By default, this means more unique BINs will be needed. The term “BIN” itself will most likely give way to IIN eventually, as new industries enter what has traditionally been banks’ operating environment.

While there’s no shortage of account numbers right now, industry insiders think long-term. In 2016, the International Organization for Standardization (ISO) announced changes to the BIN/IIN, including expanding it from six digits to the first 8. Additionally, Mastercard introduced “account ranges” to use a single BIN across multiple products, and expanded into the little-used 2-series BIN cards. As of now, issuers and their processors are not required to move to 8-digit BIN, but they may adopt an 8-digit BIN standard if they choose.

How to Make BINs Work for You

There are additional ways that BIN, IIN and MII numbers can be used to help merchants analyze and assess their payment card transactions. More–and more accurate–information can lead to more efficient operations, but the analysis process can be quite involved. That’s why it helps to have professionals in your corner.

If you’d like more information on how to use the bank identification number to your advantage, contact Chargebacks911® today. Our payment experts have the experience and expertise to help you explore different reporting and revenue optimization techniques.

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The World 1# Free Bank Identification Number Database

BREAKING DOWN Bank Identification Number - BIN

Bank identification numbers are used by other institutions, such as American Express, as well. The term "issuer identification number" (IIN) is used interchangeably with BIN. The numbering system helps identify identity theft or potential security breaches by comparing data, such as the address of the institution issuing the card and the address of the cardholder.

How It Works

The bank identification number is a numbering system developed by the American National Standards Institute and the International Organization for Standardization (ISO) to identify institutions that issue bank cards. The first digit of the BIN specifies the Major Industry Identifier (MII), such as airline, banking or travel, and the next five digits specify the issuing institution or bank. For example, the MII for a Visa credit card starts with a 4. The BIN helps merchants evaluate and assess their payment card transactions.

The BIN quickly helps a merchant identify which bank the money is being transferred from, the address and phone number of the bank, if the issuing bank is in the same country as the device used to make the transaction, and verifies the address information provided by the customer. The number allows merchants to accept multiple forms of payment and allows faster processing of transactions.

When a customer makes an online purchase, the customer enters her card details on the payment page. After submitting the first four to six digits of the card, the online retailer can detect which institution issued the customer’s card, the card brand (such as Visa or MasterCard), the card level (such as corporate or platinum), the card type (such as a debit card or a credit card), and the issuing bank country.


The BIN identifies which issuer receives the authorization request for the transaction to verify if the card or account is valid and whether the purchase amount is available on the card. This process results in the charge being either approved or denied.

For example, a customer stands at a gas pump and swipes her bank card. Once she swipes the card, the system scans the BIN to detect the specific issuing institution that withdraws the funds. An authorization request is put on the customer's account. The request is authorized within a few seconds, and the transaction is approved. The credit card processing system would be unable to determine the origin of the customer's funds and would be unable to complete the transaction without a BIN.


Bins discover card

What are the best credit card bins?

  • 485340 (best bin for DUMPS)
  • 414720.
  • 522096.
  • 535316.
  • 414794.
  • 476164.
  • 528227 and 514040.
  • 453598 and 542432.

Click to see full answer.

Likewise, what are good credit bins?

Here are a few examples of the BIN format for the most widely-used card brands in the US:

  • Visa: 4*****
  • American Express (AMEX): 34**** or 37****
  • Diner's Club: 36****
  • MasterCard: 51**** or 55****
  • Discover Card: 6011, 622126-622925, 644-649, 65.

Also, what is a bin range credit card? A bank identification number (BIN) is the initial four to six numbers that appear on a credit card. The bank identification number uniquely identifies the institution issuing the card. The BIN is key in the process of matching transactions to the issuer of the charge card.

Subsequently, one may also ask, what are the best bins for carding?

Top bins for СС

  • 414720 (best bin for СС)
  • 434256.
  • 473702 and 473703.
  • 434258.
  • 438857.
  • 549198.
  • 440066.
  • 542432.

What credit card starts with 5524?

Mastercard Credit Cards


Didyou know

BIN - Bank Identification Number, also known as the Issuer Identifier Number (IIN), refers to the first six digits of a payment card's Primary Account Number (PAN).

The Bank Identification Number (BIN) provides information about the payment card being used and the bank that issued it. It provides a way to check if the issuing bank is in the same country as the geolocation and address information provided by the consumer. While this alone is not enough to indicate fraud, it provides an additional signal as to the identity of the individual.

The BIN can also be used to reduce consumer data entry errors on check-out pages. For example, the BIN also identifies the card brand being used. The consumer can be asked to select the card brand they are using (Visa, MasterCard, Discover, American Express) and the card number the consumer enters can be checked to ensure it makes sense, and this is known as inline validation.

BIN Checks can also aid in several other checks and measures:

Export Compliance - Ensure the card issuing country is one you are allowed to sell/export goods to.

Identify Prepaid Cards - If offering the option to pay in installments or using recurring billing, prevent the customer from providing a prepaid card which may only carry a balance to cover the first transaction.


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Credit Card BIN Checkstechnique overview

The credit card number can tell you several very interesting things. By using the first 6 digits you can determine the card type (Visa, MasterCard, American Express, Discover) and you can determine the bank and country where the card was issued. The first 6 digits of the credit card number are known as the Bank Identification Number (BIN), which identifies the consumer's issuing bank and other information about thay payment card. Key considerations when implementing or buying this functionality include:

  • It is not easy to get a BIN list in-house, and is accessed most often through a third party service provider or through your acquirer.
  • There are two types of BIN lists - there are BIN lists for BIN to country, and BIN lists for bank to BIN.
  • BIN to Country List - List provides the country of issuance when provided a BIN number.
  • Bank to BIN List - List provides the bank name, phone number and country when provided a BIN number
  • Does the provider offer a BIN List or database for the merchant to keep and use in-house, do they offer a hosted BIN lookup service, or both?
  • For vendors that provide BIN list or database, how often are these databases updated? Do they offer a subscription service that includes updates, or must you purchase periodic updates to the database?

How does it work?

Credit card numbers are ISO 7812 numbers. As an ISO 7812 number it contains:

  • A single-digit major industry identifier (MII) (the MII is considered to be part of the issuer identifier number), a six-digit issuer identifier number (IIN), an account number, and a single digit checksum using the Luhn algorithm.

Cards participating in the BIN system include:

  • Credit cards, debit cards, charge cards, stored-value cards, and Electronic Benefit Transfer (EBT) cards.


The term "Issuer Identification Number" (IIN) is replacing "Bank Identification Number". See ISO 7812 for more information.

The prefixes and lengths for the most common card types are:

Card TypePrefix(es)LengthValidation
American Express34, 37[1]


Luhn algorithm

China Union Pay622 (622126-622925)16,17,18,19


Diners Club Carte Blanche300-305


Luhn algorithm

Diners Club International[4]



Luhn algorithm

Diners Club US & Canada



Luhn algorithm

Discover Card

6011, 65


Luhn algorithm




Luhn algorithm




Luhn algorithm

Laser (debit card)

6304, 6706, 6771, 6709


Luhn algorithm / unknown?

Maestro (debit card)



Luhn algorithm




Luhn algorithm

Solo (debit card)



Luhn algorithm

Switch (debit card)



Luhn algorithm




Luhn algorithm

Visa Electron (debit)



Luhn algorithm


How do you use the results?

Online merchants may use BIN lookups to help validate transactions. For example, if the credit card's BIN indicates a bank in one country, while the customer's billing address is in another, the transaction may require additional review. With BIN services that provide more information than just the issuing country, this data can also be beneficial. For example recognizing and preventing the use of prepaid cards for recurring transactions. In cases of a data breach against a particular issuer compromising many of their cardholders, the BIN can be used to flag potentially bad orders coming from these cards. The BIN check has uses outside of fraud prevention as well, such as recognizing the card type before attempting authorization to ensure you accept that card brand.


Now discussing:

Part 1: All You’ve Ever Wanted to Know About Credit Cards

Interested in the history of credit cards? The make-up of a credit card? Credit Card Programs? Transaction Processing? Key Players in the industry? This is part one of a three part series in “All You’ve Ever Wanted to Know About Credit Cards” – follow along weekly!

A Brief History

A credit card is a thin plastic card, usually 3-1/8 inches by 2-1/8 inches in size, that contains identification information such as a signature or picture, and authorizes the person named on it to charge purchases or services to his account — charges for which he will be billed periodically. ¬†The use of credit cards originated in the United States during the 1920s, when individual companies, such as hotel chains and oil companies, began issuing them to customers for purchases made at those businesses. This use increased significantly after World War II.

The Make-up of a Credit Card

The Primary Account Number (PAN)

Although phone companies, gas companies and department stores have their own numbering systems, ANSI Standard X4.13-1983 is the system used by most national credit-card systems.

Here are what some of the numbers stand for:

The first digit in your credit-card number signifies the system:

  • 3 – travel/entertainment cards¬†(such as American Express and Diners Club)
  • 4 – Visa
  • 5 – MasterCard
  • 6 – Discover Card

The structure of the card number varies by system. For example, American Express card numbers start with 37; Carte Blanche and Diners Club with 38.

  • American Express¬†- Digits three and four are type and currency, digits five through 11 are the account number, digits 12 through 14 are the card number within the account and digit 15 is a check digit.
  • Visa¬†- Digits two through six are the bank number, digits seven through 12 or seven through 15 are the account number and digit 13 or 16 is a check digit.
  • MasterCard¬†- Digits two and three, two through four, two through five or two through six are the bank number (depending on whether digit two is a 1, 2, 3 or other). The digits after the bank number up through digit 15 are the account number, and digit 16 is a check digit.

BIN/ICA Numbers

BIN stands for Bank Identification Number and is how VISA delineates to which financial institution (e.g., issuing bank, acquiring bank, etc.) transactions, data and/or information belongs. ¬†MasterCard’s equivalent to a BIN is an Interbank Card Association Number (ICA), which plays the same role as VISA’s BIN. BINs and ICAs are only available to member financial institutions and are the only level of management and reporting outside of individual merchants that the networks have available. ¬†In short, a BIN/ICA is a numeric representation of a financial institution (banks may have numerous BINs/ICAs) so the networks can easily, and usually electronically, delineate and interact with their members. ¬†VISA and MasterCard only provide their reporting at the BIN or ICA levels.¬†(source)

The Magstripe

The stripe on the back of a credit card is a magnetic stripe, often called a magstripe. The magstripe is made up of tiny iron-based magnetic particles in a plastic-like film. Each particle is really a tiny bar magnet about 20-millionths of an inch long.

The magstripe can be “written” because the tiny bar magnets can be¬†magnetized¬†in either a north or south pole direction. The magstripe on the back of the card is very similar to a piece of cassette tape (see¬†How Cassette Tapes Work¬†for details).

A magstripe reader (you may have seen one hooked to someone’s¬†PC¬†at a bazaar or fair) can understand the information on the¬†three-track stripe. If the ATM isn’t accepting your card, your problem is probably either:

  • A dirty or scratched magstripe
  • An erased magstripe (The most common causes for erased magstripes are exposure to magnets, like the small ones used to hold notes and pictures on the¬†refrigerator, and exposure to a store’s¬†electronic article surveillance¬†(EAS) tag demagnetizer.)

There are three tracks on the magstripe. Each track is about one-tenth of an inch wide. The ISO/IEC standard 7811, which is used by banks, specifies:

  • Track one is 210¬†bits¬†per inch (bpi), and holds 79 6-bit plus parity bit read-only characters.
  • Track two is 75 bpi, and holds 40 4-bit plus parity bit characters.
  • Track three is 210 bpi, and holds 107 4-bit plus parity bit characters.

Your credit card typically uses only tracks one and two. Track three is a read/write track (which includes an encrypted PIN, country code, currency units and amount authorized), but its usage is not standardized among banks.

The information on track one is contained in two formats: A, which is reserved for proprietary use of the card issuer, and B, which includes the following:

  • Start sentinel¬†- one character
  • Format code=”B”¬†- one character (alpha only)
  • Primary account number¬†- up to 19 characters
  • Separator¬†- one character
  • Country code¬†- three characters
  • Name¬†- two to 26 characters
  • Separator¬†- one character
  • Expiration date or separator¬†- four characters or one character
  • Discretionary data¬†- enough characters to fill out maximum record length (79 characters total)
  • End sentinel¬†- one character
  • Longitudinal redundancy check¬†(LRC) – one character LRC is a form of computed check character.

The format for track two, developed by the banking industry, is as follows:

  • Start sentinel¬†- one character
  • Primary account number¬†- up to 19 characters
  • Separator¬†- one character
  • Country code¬†- three characters
  • Expiration date or separator¬†- four characters or one character
  • Discretionary data¬†- enough characters to fill out maximum record length (40 characters total)
  • LRC¬†- one character

For more information on track format, see ISO Magnetic Stripe Card Standards.

There are three basic methods for determining whether your credit card will pay for what you’re charging:

  • Merchants with few transactions each month do¬†voice authentication¬†using a touch-tone phone.
  • Electronic data capture¬†(EDC) magstripe-card swipe terminals are becoming more common — so is swiping your own card at the checkout.
  • Virtual terminals¬†on the Internet

This is how it works: After you or the cashier swipes your credit card through a reader, the EDC software at the point-of-sale (POS) terminal dials a stored telephone number (using a modem) to call an acquirer. An acquirer is an organization that collects credit-authentication requests from merchants and provides the merchants with a payment guarantee.

When the acquirer company gets the credit-card authentication request, it checks the transaction for validity and the record on the magstripe for:

  • Merchant ID
  • Valid card number
  • Expiration date
  • Credit-card limit
  • Card usage

Single dial-up transactions are processed at 1,200 to 2,400 bits per second (bps), while direct Internet attachment uses much higher speeds via this protocol. In this system, the cardholder enters a personal identification number (PIN) using a keypad.

The PIN is not on the card — it is¬†encrypted¬†(hidden in code) in a database. (For example, before you get cash from an ATM, the ATM encrypts the PIN and sends it to the database to see if there is a match.) The PIN can be either in the bank’s computers in an encrypted form (as a¬†cipher) or encrypted on the card itself. The transformation used in this type of cryptography is called¬†one-way. This means that it’s easy to compute a cipher given the bank’s¬†key¬†and the customer’s¬†PIN, but not computationally feasible to obtain the plain-text PIN from the cipher, even if the key is known. This feature was designed to protect the cardholder from being impersonated by someone who has access to the bank’s computer files.

Likewise, the communications between the ATM and the bank’s central computer are encrypted to prevent would-be thieves from¬†tapping into the phone lines, recording the signals sent to the ATM to authorize the dispensing of cash and then feeding the same signals to the ATM to trick it into unauthorized dispensing of cash.

Integrated Circuit (IC) Cards ‚Äì “chip cards”

The¬†“smart” credit card¬†is an innovative application that involves all aspects of¬†cryptography¬†(secret codes), not just the authentication we described in the last section. A smart card has a¬†microprocessor¬†built into the card itself. Cryptography is essential to the functioning of these cards in several ways:

  • The user must corroborate his identity to the card each time a transaction is made, in much the same way that a PIN is used with an ATM.
  • The card and the card reader execute a sequence of encrypted sign/countersign-like exchanges to verify that each is dealing with a legitimate counterpart.
  • Once this has been established, the transaction itself is carried out in encrypted form to prevent anyone, including the cardholder or the merchant whose card reader is involved, from “eavesdropping” on the exchange and later impersonating either party to defraud the system.

This elaborate protocol is conducted in such a way that it is invisible to the user, except for the necessity of entering a PIN to begin the transaction.

Smart cards first saw general use in France in 1984. They are now hot commodities that are expected to replace the simple plastic cards most of us use now. Visa and MasterCard are leading the way in the United States with their smart card technologies.

The chips in these cards are capable of many kinds of transactions. For example, you could make purchases from your credit account, debit account or from a stored account value that’s reloadable. The¬†enhanced memory and processing¬†capacity of the smart card is many times that of traditional magnetic-stripe cards and can accommodate several different applications on a single card. It can also hold identification information, keep track of your participation in an affinity (loyalty) program or¬†provide access to your office. This means no more shuffling through cards in your wallet to find the right one — the smart card will be the only one you need!

Experts say that internationally accepted smart cards will be increasingly available over the next several years. Many parts of the world already use them, but their reach is limited. The smart card will eventually be available to anyone who wants one, but for now, it’s available mostly to those participating in special programs.

Credit Card Programs

Before we get into shopping for a card, let’s go over some important terms you’ll encounter in credit-card brochures or discussions with potential lenders:

  • Annual fee¬†- A flat, yearly charge similar to a membership fee.¬†Many companies offer “no annual fee” cards today, and lenders who do charge annual fees are often willing to waive them to keep your business.
  • Finance charge¬†- The dollar amount you pay to use credit.¬†Besides interest costs, this may include other charges such as¬†cash-advance fees, which are charged against your card when you borrow cash from the lender. (You generally pay higher interest on cash advances than on purchases — check your latest bill to find out what you’re paying for this service!)
  • Grace period¬†- A time period, usually about 25 days, during which you can pay your credit-card bill without paying a finance charge.¬†Under almost all credit-card plans, the grace period only applies if you pay your balance in full each month. It does not apply if you carry a¬†balance forward. Also, the grace period does not apply to cash advances.
  • Annual percentage rate¬†(APR) – The yearly percentage rate of the finance charge.¬†Interest rates¬†on credit-card plans change over time. Some of these adjustments are tied to changes in other interest rates, such as the¬†prime rate¬†or the¬†Treasury Bill rate, and are called¬†variable-rate plans. Others are not explicitly tied to changes in other interest rates and are called¬†fixed-rate plans.
  • Fixed rate¬†- A fixed annual percentage rate of the finance charge
  • Variable rate¬†- Prime rate (which varies) plus an added percentage (For example, your rate may be PR + 3.9 percent.)Introductory rate¬†- A¬†temporary, lower APR that usually lasts for about six months before converting to the normal fixed or variable rate (This is a hot topic — more about it later.)

If you’ve had credit problems, you might have to settle for a card with a slightly higher rate. If you have poor credit or no credit, some banks will issue you a¬†secured credit card. This means that you deposit money into a savings account that acts as collateral against your credit line.

The rate may be high, but a secured card offers you the convenience of a credit card while you work on rebuilding your credit. Secured cards are often the best option available to those with a bankruptcy in their past. Be sure to choose a secured card that pays you interest on your deposit!

Card Types

Consumers today can choose from a wide variety of payment cards, and the universe of cards can be partitioned in several ways.

By Merchant Acceptance

For example, one way to differentiate cards is according to the merchants who accept them. Some retailers issue private-label (house) cards that are accepted only in their stores. Examples include Sears and Macy’s. General-purpose cards, by contrast, are accepted by a wide variety of merchants. Visa and MasterCard are the most common examples.

By Payment Due Date

Another way to classify payment cards is by the amount of time consumers have before payment is due. Debit cards enable a direct withdrawal from the user’s savings or checking account, and payment is due much sooner than for a credit or charge card. Debit cards can be used in either online or offline mode. When used in online mode, the card is swiped through a terminal equipped to handle a personal identification number (PIN). In this case, the cardholder enters a PIN instead of signing a transaction slip, and funds are deducted from the user’s account immediately. In offline mode, the card is swiped through a standard terminal, and no PIN is entered. Instead, the merchant obtains the cardholder’s signature. In this case, the customer’s account is debited within two or three days. A debit card user can purchase any amount up to his balance in that account, and some of these cards even come with overdraft protection.

In contrast, credit cards and charge cards allow the purchaser a longer period of time before he must deliver funds to cover the purchase, and the card may or may not have a predetermined spending limit. Charge cards require the cardholder to pay the balance in full each month unless special arrangements have been made while credit cards allow him the option to make only a minimum payment and pay interest on the balance carried from month to month.

By Issuer Type

Still another way to distinguish payment cards is by the type of issuer. Financial institutions issue bankcards, which may be either charge cards or credit cards. Visa and MasterCard are the most popular examples. Nonfinancial institutions issue non-bankcards. Market participants subdivide these non-bankcards into two subcategories. Nonbank credit cards, such as Discover Card, enable the cardholder to roll over a balance from month to month while some travel and entertainment cards, such as the American Express Rewards Green Card and the Diners Club Charge Card, are charge cards.

Affinity Cards

You may also be familiar with what is known as an¬†affinity card. This card — typically a MasterCard or Visa — carries the¬†logo¬†of an organization in addition to the lender’s emblem. Usually, these cardholders derive some benefit from using the card — maybe¬†frequent-flyer miles¬†or points toward merchandise. The organization solicits its members to get cards, with the idea of keeping the group’s name in front of the cardholder. In addition to establishing brand loyalty, the organization receives some financial incentive (a fraction of the annual fee or the finance charge, or some small amount per transaction, or a combination of these) from the credit-card company.


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