A Bank Identification Number (or BIN for short) is comprised of the first six to eight digits of a payment card. This initial sequence of numbers is used by financial institutions, card networks, and merchants to identify the issuer and streamline digital transactions.
Unfortunately, bad actors can exploit BINs through a form of credit card fraud known as a BIN attack. This brute-force method of obtaining financial information can cause significant monetary and reputational damage to businesses. In this blog post, we’ll explain what BIN attacks are, their potential impact on merchants, and how payment orchestration platforms can help prevent them.
What is a BIN Attack?
A BIN attack is a type of fraud where cybercriminals try all combinations of payment information until a valid card is found. Once identified, the card can be used for fraudulent purchases, or the information it contains may be sold on the dark web.
This kind of systematic hacking technique is known as a brute-force attack. It’s a method that relies on the fraudster’s ability to guess a valid combination of a credit card number, expiration date, and CVV (card verification value) through trial and error. A BIN attack is typically not a manual process, however; fraudsters use automated scripts or bots to rapidly submit transactions on merchant websites, hoping to find an active card number. This brute-force attack requires less skill than other hacking methods, but can be just as dangerous.
How a BIN Attack Works
BIN attacks usually follow a predictable, four-step approach. Here’s the breakdown:
BIN Identification: Fraudsters obtain a known BIN from a specific bank or card issuer.
Card Number Generation: Based on that BIN, they generate multiple potential card numbers using the Luhn algorithm. More sophisticated attacks may also use automated scripts or bots.
Small Transaction Attempts: Fraudsters attempt small transactions on various websites—usually those with weak security—to determine which numbers are valid.
Larger-Scale Exploitation: Once they find working card details, they use them for fraudulent purchases or sell them to other criminals.
BIN attacks spell negative consequences for both merchants and cardholders. Businesses experience chargebacks and financial loss, and cardholders must deal with the headache of disputing unauthorized transactions.
Common Targets of BIN Attacks
Certain industries are especially vulnerable to BIN attacks, particularly those that process a high volume of online transactions (or those that do not require strict verification measures during the checkout process). These often include the following sectors:
E-commerce: Online retailers process high volumes of card-not-present (CNP) transactions, making them prime targets.
Subscription services: Fraudsters sometimes prefer to test cards with recurring payment models to ensure continued use.
Travel and hospitality: Airlines, hotels, and booking platforms experience frequent fraud attempts due to the industry’s notoriously high transaction values.
Payment processors and merchants: Any business handling large amounts of digital transactions are ideal targets.
The Impact of BIN Attacks on Businesses
BIN attacks can lead to severe consequences for businesses, including:
Financial loss due to fraudulent transactions and chargebacks
Reputational damage and loss of customer trust
Increased operational costs to handle fraud dispute
Potential for penalties due to non-compliance with payment security regulations
How to Prevent BIN Attacks
The potential damage of BIN attacks on businesses is not something to take lightly. Here are six actionable steps that merchants can take to prevent this nefarious form of fraud:
Implement advanced fraud detection systems to monitor and block suspicious transactions.
Utilize tokenization and encryption to protect sensitive card data.
Set transaction limits and velocity rules to identify unusual changes in activity.
Educate employees and customers on fraud risks. Prevention is always key.
Regularly audit and update your systems to identify vulnerabilities.
Utilize payment orchestration platforms for more secure transaction management.
How Payment Orchestration Helps Prevent BIN Attacks
Speaking of payment orchestration, platforms such as IXOPAY can provide businesses with the best toolkit to combat BIN attacks effectively. These include:
Fraud detection and prevention tools, which empower merchants to easily incorporate better security systems into their payment ecosystems
Advanced authentication measures, such as 3-D Secure
Robust data visibility and reporting, including centralized dashboards for monitoring and analyzing transactions
Conclusion
BIN attacks pose a significant risk to businesses that process digital transactions. Fortunately, by leveraging payment orchestration platforms like IXOPAY, companies can significantly reduce their exposure to fraud. For more insights, check out this webinar on reducing fraud rates.