Recently I’ve been speaking with a lot of agents who are on a quest for a dedicated BIN. Apparently some providers are touting benefits such as that it can help them earn bigger profits and become the master of their own destiny.
However, after closely examining what it means to have a BIN, you’ll see that there is really more than meets the eye. Along with a BIN comes many additional responsibilities and duties other than what’s required of the typical ISO that offers credit card processing services. This is why it’s critical that you’re aware of the five most common myths of using a unique BIN.
Before we get to the myths, let’s clarify what a BIN is. I suspect many of you have heard the term, but are not quite sure what it means. BIN stands for “Bank Identification Number” and acts like an account number with Visa. MasterCard uses the term ICA (Interbank Card Association) and Discover uses Acquirer ID for the same purpose, but BIN is the commonly used term for all associations.
Each BIN is tied to a sponsoring bank, but a sponsoring bank may have more than one BIN. Merchants and their processing activity are grouped under a BIN. Visa, sponsoring banks and processors use BINs to properly route transactions, reconcile activity and report activity to the associations. Most ISOs use what is called a “shared BIN” with their sponsoring bank, meaning their merchants are grouped with those of other ISOs.
Now that you hopefully understand the basic concept of a BIN, let’s address five myths of using a unique BIN.
Myth #1: If you are a registered ISO, you have to use a dedicated BIN.
Just because you’re a registered ISO doesn’t mean you have to use a unique BIN. These two activities are not dependent upon one another. You can use a different BIN, but it is not required.
Myth #2: Having a BIN means I’ll get better rates and fees.
Just yesterday I spoke with an agent who was told by one of the industry’s largest merchant services providers that he would get better rates if he had a segregated BIN. Unfortunately this is not necessarily the case. Negotiating better rates for credit card processing services is dependent upon many factors, such as sales production, processing volume levels, portfolio risk levels, and bringing service-level functions in-house. Larger ISOs who earn better rates may be more likely to have a unique BIN, but it isn’t the BIN itself that yielded the lower fees.
Myth #3: By using a dedicated BIN, I’ll have the ability to move my portfolio.
Just because you use a dedicated BIN, it doesn’t mean you’ll have the ability to move your portfolio. Being able to move your portfolio depends on the terms of the contract you have with your merchant services provider and whether or not you have a portability or ownership clause. Don’t be fooled that you can move your merchants just because you have a unique BIN. It might seem easier because they’re grouped together into what appears to be a neat little package. Chances are you’ll have to get a separate BIN with your new provider in order to ensure a smooth, seamless conversion.
Myth #4: My business will be given priority over other agents and MLS.
Some ISOs feel like there is a certain degree of prestige that goes hand in hand with having a dedicated BIN. However, this is typically a perception only because using a segregated BIN does not reflect anything about one’s sales ability, the success of their business or their commitment to a processor.
Myth #5: I’ll have greater access to the information distributed by the card associations.
Once upon a time, this was true. Using a dedicated BIN meant that you could be granted additional access to the card association’s portals of information, if your sponsor bank granted you that access. However, today Visa, MasterCard and Discover make most information available to all parties in the payments industry.
When deciding whether or not to use a unique BIN, it’s crucial that you perform a cost benefit analysis. Do the financial resources and time you’ll spend to obtain that BIN, which can be as long as 90-120 days, outweigh the benefits?
