Debit cards have become exceedingly popular in recent years. These are cards issued by banks to their account holders that resemble in many ways credit cards. They don't extend credit, however. What they do is allow you to draw money from your account directly. This is a great new convenience and more efficient and time-saving than writing checks for every single purchase.
Consumers must be aware, too, that many merchants charge a fee for this convenience. This can add up over time and be more costly than carrying around cash or even writing those pesky checks.
But for merchants, the debit card conundrum is a slippery slope. While they benefit from the option to charge extra fees for debit card purchases (and many businesses don't practice this policy), and they also benefit from the convenience offered to their consumers, they are as much at risk for chargebacks as they are if the consumer uses a credit card and commits fraud.
Chargebacks are reversals of payments made from a bank or card issuer due to a dispute of fraud or dissatisfaction or other complaint. While debit card purchases require the consumer to enter a PIN (Personal Identification Number) when using their debit card, this doesn't eliminate the threat of fraud. Identity theft and increasingly resourceful thieves have developed ways to steal these numbers and create duplicate cards, or outright steal them. This doesn't absolve the merchant from responsibility for accepting debit card purchases that are in actuality fraudulent.
This is where BIN checking through BIN database becomes an important role in consumer and merchant protection. Every card, whether it's a bank card or credit card, is issued a BIN number. BIN database store information on all issued cards and that information includes bank issuers, cardholder, billing address, and other vital information.
When a merchant runs a BIN check through the BIN database, they can verify not only by PIN number, which has been proven to be not as protective as once thought, but also by country, address, or other information the merchant deems suitable. Many consumers may not understand why their PIN number isn't sufficient, but they're not the ones who will have to incur the costs of a chargeback if the purchase is deemed fraudulent. Debit cards offer great benefits, but it is this false sense of security that has left open the door for criminals to take advantage. BIN database helps close that door.
