Each and every year online merchants lose billions of dollars due to credit card fraud. The problem is, most consumers feel that credit card fraud is a victimless crime due to the laws in place to protect a victim from any real financial loss. This couldn't be further from the truth.
When credit card fraud occurs merchants pay the price and in turn the prices consumers pay for services and products go up. The crime is far from victimless, but merchants are finding a way to fight back and lessen some of the risk.
Using a BIN Database to Reduce LossOnline merchants who are tired of unmitigated loss from credit card fraud are turning to BIN databases to help. While there are many programs available, a BIN database is one of the most effective, allowing merchants to cross check the credit card information that is given to them to be sure that it can be authorized.
All major credit and debit card companies use the BIN system to track cards and connect them to their networks. When a merchant uses a BIN database they are able to verify that the card in question is from a legitimate credit card company.
A BIN database provides the merchant with information about the issuing bank such as the country it is located in, the customer's billing address and other helpful information. The merchant can use this information as a factor in deciding whether or not to approve a transaction. If a card's BIN is not found in the database, the merchant can decline the transaction to avoid fraudulent activity.
Many online merchants also use BIN databases to determine what type of card is being used to pay for a transaction, such as a credit, debt, or prepaid card. The reason for this is that prepaid cards have a higher rate of fraud. Many merchants use a prepaid flag that will alert them when the card is prepaid so they can either inspect it more closely or simply reject it to be safe. Putting such practices into place can significantly reduce a merchant's risk of loss from fraud.
