How Are Credit Card Numbers Generated?
Demystify credit card numbers. Understand the precise, systematic logic that governs their creation and ensures their validation for secure transactions.
Credit card numbers serve as unique identifiers for financial transactions, enabling secure and efficient payment processing. Each credit card number is systematically generated and structured according to international standards. This organization ensures the uniqueness of each card and its ability to be validated during transactions.
Components of a Credit Card Number
Every credit card number contains distinct sections, each carrying specific information about the card and its issuer. The initial digit of a credit card number is known as the Major Industry Identifier (MII), which indicates the industry that issued the card. For instance, numbers beginning with ‘4’ are for Visa cards, while ‘5’ signifies Mastercard. American Express cards start with a ‘3’.
Following the MII are the next five to eight digits, which form the Issuer Identification Number (IIN), also commonly referred to as the Bank Identification Number (BIN). This segment precisely identifies the financial institution that issued the credit card. The IIN allows payment systems to route transactions to the correct bank for authorization. This segment is crucial for distinguishing between card issuers.
The subsequent digits, varying in length, constitute the Primary Account Number (PAN). This is the longest segment, uniquely identifying the cardholder’s account within the issuing bank’s system. The PAN ensures each card account is distinct, and its variable length allows for a vast number of unique cards. The final digit is the check digit, which serves as a validation tool.
The Luhn Algorithm
The check digit is determined using the Luhn algorithm, also known as the “mod 10 algorithm.” This algorithm protects against accidental errors, such as mistyping a digit. It does not provide cryptographic security but helps confirm the structural validity of the number. It is widely used for validating identification numbers, including credit card numbers.
The calculation process begins by examining the digits of the credit card number from right to left. Starting from the check digit itself, every second digit is doubled. For example, if a digit is ‘7’, doubling it results in ’14’. If doubling a digit results in a two-digit number, the individual digits of that result are summed together; in the case of ’14’, this would become ‘1 + 4 = 5’.
All the digits, including the original undoubled digits and the summed results from the doubled digits, are then added together. If the total sum is a multiple of 10, the number is considered valid. For instance, consider the number 49927398716. Doubling every second digit from the right (excluding the check digit ‘6’): 4 (9\2=18->9) 9 (2\2=4) 7 (3\2=6) 9 (8\2=16->7) 7 (1\2=2) 6. Summing these values (4+9+9+4+7+6+9+7+7+2+6) results in 70, which is divisible by 10, indicating a valid number.
Issuing and Validation
Credit card companies like Visa and Mastercard do not directly issue cards to consumers. They assign specific ranges of Issuer Identification Numbers (IINs) to banks and financial institutions globally. These IIN ranges are carefully managed to ensure uniqueness and prevent overlaps. This systematic allocation forms the foundation for how credit card numbers are distributed.
Banks then generate Primary Account Numbers (PANs) for individual cardholders within their assigned IIN ranges. This process ensures each card issued is unique and adheres to the established structure, including the final check digit derived from the Luhn algorithm. Banks are responsible for maintaining the integrity and uniqueness of the PANs they issue, allowing them to manage millions of distinct card accounts.
When a credit card transaction occurs, merchants and payment processors often perform an initial validation using the Luhn algorithm. This check helps to catch simple data entry errors, such as a mistyped digit, before the transaction is sent for further processing. While the Luhn algorithm confirms the number’s structural validity, it does not verify the existence of an account or the availability of funds. For authorization, the transaction data, including the full credit card number, must be securely transmitted to the issuing bank for real-time approval.