Using BIN, BIC, and IBAN Checks to Detect Fraudulent Transactions

Introduction

BIN, BIC, and IBAN codes play a critical role in identifying financial institutions and securing international transactions. Validating these codes enhances efficiency, prevents fraud, and ensures payment accuracy.

In this guide, you'll learn everything you need to know about these codes and how to use them to enhance payment security.

What is a Bank Identification Number (BIN)?

A Bank Identification Number (BIN) consists of the first six to eight digits on a credit or debit card. It provides information about the issuing bank or financial institution, helping businesses link transactions and detect fraudulent activity.

The official shift to eight-digit BINs was announced by the International Organization for Standardization (ISO) and went into effect in April 2022. BINs now range from the first six to eight digits on a credit or debit card.

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BIN numbers provide the following details:

• The name, address, and phone number of the issuing bank.
• The card brand and level.
• The relationship between the transaction’s origin and the issuing bank's country.

What is a Business Identifier Code (BIC)?

A Business Identifier Code (BIC), also known as a SWIFT code, is an eight- to eleven-character code used to identify banks and financial institutions during international transactions.

BIC Code Format

BBBBCCDDXXX

• BBBB – The first four letters represent the bank’s name.
• CC – The next two letters indicate the country code.
• DD – These two characters (letters or numbers) specify the bank’s location.
• XXX – The last three characters (letters or numbers) identify a specific branch or default to the main office.

What is an International Bank Account Number (IBAN)?

The International Bank Account Number (IBAN) is a globally recognized format used for payment transactions to ensure accuracy and security. It consists of up to 34 alphanumeric characters, including a country code, check digits, and a unique account number. The check digits validate the bank account before a transaction is processed.

Importance of BIN, BIC, and IBAN Checks in Payment Security

1. Accuracy of Transactions

BIN and BIC checks help businesses verify the issuing bank, while IBAN validation confirms the accuracy of an account number before a transaction is processed. These checks prevent misdirected payments and unauthorized transactions.

2. Facilitating International Transactions

BIN lookup identifies the issuing bank’s location, while BIC and IBAN validation ensures international payments are routed correctly.

SEPA and SWIFT were created to streamline international transactions. IBANs and BICs ensure payments reach the correct recipient.

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3. Compliance with Regulatory Requirements

Validating BIN, BIC, and IBAN helps businesses comply with regulations such as AML and KYC. These checks improve traceability and prevent fraudulent transactions.

4. Enhancing Efficiency and Reducing Costs

Tools like Greip’s IBAN Validation streamline payment processes, reducing transaction errors, costs, and delays.

Differences Between IBAN, BIN, and BIC

1. Structure

• IBAN: Up to 34 characters, including country code, check digits, bank identifier, branch code, and account number.
• BIC: Eight to eleven characters specifying the bank’s name, country, and location.
• BIN: Six to eight digits identifying the issuing financial institution.

2. Use Cases

• BIN: Identifies the financial institution that issued a payment card.
• BIC: Identifies a financial institution in international transactions.
• IBAN: Identifies a bank account and country in cross-border transactions.

How to Implement BIN, BIC, and IBAN Checks in Payment Processing

1. Use specialized tools like Greip’s BIN checker and IBAN validation tool.
2. Integrate BIN, BIC, and IBAN databases into your payment processing system.
3. Validate transaction details against the database before processing payments.
4. Flag transactions with incorrect or suspicious details.
5. Update your database as frequently as required by financial institutions or compliance regulations — some industries may require real-time or daily updates for optimal fraud prevention.
6. Train employees on the importance of these validation processes.

Conclusion

BIN, BIC, and IBAN validation enhances payment security by preventing fraudulent transactions and reducing errors. While each serves a different function, they collectively contribute to efficient, secure financial operations.

FAQs

What Happens When an Incorrect IBAN is Used for Transactions?

An incorrect IBAN can result in a failed payment or funds being transferred to the wrong account.

How Can Suspicious Payment Transactions Be Identified?

If a BIN, BIC, or IBAN does not match records in Greip’s database, the transaction may be fraudulent and should be investigated before processing.

How Long Do IBAN Transfers Take?

IBAN transfers typically take one to five business days, depending on time zones, bank holidays, and currency conversion processes.