A BIN list can be downloaded in Excel format to use as a database, or it can be consulted directly using an API. How does this work?
The BIN database, also commonly known as the Bank Identification Number database, is used for card verification. Any credit or debit card issued by a bank will have its information captured in the database. The database is then used as a tool for verification purposes. In other words, the card being used will be compared to the information in the database. If it is correct, the transaction will be approved. If found to be incorrect, the transaction will be instantly declined.
As you can see, the database can be a very useful tool if you are handling transactions online. What happens if the card being used is stolen? Without a BIN list, you will never know, until the bank notifies you that the charge was refunded.
A chargeback occurs when the rightful owner of the card files a dispute with the bank. He or she can claim that the transaction is unauthorized (as is the case when a card is stolen) and that the transaction is fraudulent. The bank is likely to side with the consumer. When that happens, the bank issues a charge and the funds are returned to the card owner. The retailer will be responsible for the return fees. What happens to the merchandise that has already been sent to the customer? The responsibility lies with the retailer to get it back. As you can imagine, this task is fraught with difficulties. It is a route that most business owners would prefer to avoid. Goods can sometimes cost up to thousands of dollars per transaction and the experience can be extremely painful.
To avoid such cases, a BIN database can be downloaded and used to prevent card fraud. Traditionally, the database is only available in Excel format. This is a common database format and most developers would have no problem integrating the database with the back end of an e-commerce website.
But some business owners just don’t want the hassle of having to update the database on a regular basis. For these business owners, they have another option. They can now submit queries directly to the database through an online API.
The API is a great solution because business owners don’t have to deal directly with the database. All updates are handled by the service providers. To use the database, simply send a request using the API and the service provider will return a response in XML format. It may seem a bit technical at this point, but it is actually an easier solution to implement compared to a database.