Move to Longer BINs & CUs Should Watch the Calendar

Big changes in bank identification numbers (BINs) are coming to the payments world, and one industry pro is warning credit unions to take action now if they want to avoid unexpected costs and payment problems.

The warning revolves around changes currently scheduled to take place in April of 2022, when card networks including Visa and Mastercard plan to implement a new industry standard lengthening BINs from six digits to eight digits. (Mastercard’s website said issuers and processors are not mandated to move to eight-digit BINs but that it “is strongly recommended.”)

BINs identify the institution issuing an account so that transactions are routed properly. The supply is running low for a variety of reasons, one of which is the growth in digital payments, said Carol Logan, who is director of client services at Seattle-based Member Access Processing.

“For every issued BIN that participates in tokenization, which would support Apple Pay, Samsung Pay, and all of those, Visa has to assign a unique BIN associated with that issuing BIN. So basically for every tokenized BIN, there are really two BINs in use,” she explained.

There may be consequences for those who aren’t ready.

“If an issuer is not prepared, what will happen is come migration day in April of 2022, a single BIN that they have will suddenly become 100 BINs,” she said. Going from six-digit BINs to eight-digit BINs could mean that a BIN of 412345, for example, becomes 41234500, 41234501, and so on to 41234599.

“So that expansion on one six-digit BIN will equate to 100 eight-digit BINs,” she noted. “That is just too much to manage for any issuer, logistically, financially. Any licensing fees associated with those additional BINs will apply.”

What Credit Unions Should Do Now

Credit unions can do three things to prepare for the change, according to Logan.

1. Analyze BIN use

“That is easily started by requesting what’s called a BIN Utilization Report from Visa,” Logan said. That report will tell issuers what account ranges are in use now. “That is the starting point for every issuer’s analysis of what direction they need to go,” she said.

Credit unions may also need to consider their card-issuing strategy when they decide what their eight-digit BINs are going to be. “They will be expected to release all the unused eight-digit BINs for distribution to other issuers, because they don’t need them,” she said.

2. Analyze PAN strategies

Issuers shouldn’t worry about running out of primary account numbers (PANs), Logan said. “The numeric capacity of one eight-digit BIN is actually 10 million PANs, so there’s plenty of PANs to utilize,” she said.

But if and when issuers send out new cards depends on their PAN strategy.

“What kind of randomization is used in the current issuance of a PAN? Do they create a PAN that starts with a random number at the seventh digit today? If that’s the case, those are the issuers that are going to have a greater need and a bigger effort to get prepared for this mandate,” she explained. “They are the ones that are going to need to reissue more cards. But for the issuer who today might randomize their PAN beyond the eighth digit, or even better beyond the ninth digit, they’re going to be in really good shape because they will not have to reissue cards from those BIN ranges or account ranges that are outside of the target eight-digit BIN. They’re going to have survived come time for the mandate.”

3. Analyze calendars

“Don’t wait,” Logan said. “If the issuer is not prepared and their processors are not prepared, there is a risk for declines.”

“In 2022 if they are caught unaware and have 100 times more BINs than they need, they are essentially going to be liable for 100 times more licensing fees then they should have to pay,” she added. “So that is the major preparation that needs to happen to avoid financial loss.”

But there’s another reason issuers should start thinking now about an implementation date that’s 36 months away, Logan noted. It’s that, ideally, credit unions and other card issuers that want to reissue cards with the appropriate eight-digit BIN characteristics can do so over their natural reissuance cycles, which are typically 36 months long.

“So where does that put us?” she asked. “We’re kind of there. We’re there now.”