How to Get a BIN Number and What Businesses Need

Identification numbers are crucial identifiers in the financial ecosystem, facilitating transactions and operations for individuals and businesses. These unique codes streamline processes like verifying identities, routing funds, and ensuring regulatory compliance. Understanding the distinct purposes of different identification numbers is important for navigating modern finance, as each plays a specific part in maintaining order and security within global transactions.

What is a Bank Identification Number (BIN)

A Bank Identification Number (BIN) refers to the initial four to six digits on a credit, debit, or other payment card. This sequence identifies the financial institution that issued the card, providing information about the card’s issuer and type (such as credit, debit, or prepaid). The BIN can also indicate the card level (e.g., standard, gold, platinum) and country of issuance.

Individuals or businesses do not directly obtain a BIN. Instead, the BIN is embedded within payment cards issued by banks or other financial entities. While historically known as Bank Identification Numbers, they are also called Issuer Identification Numbers (IINs) because non-bank entities now issue many payment cards.

BINs in Payment Processing

The BIN plays a practical role within the payment processing ecosystem. When a customer initiates a transaction, the payment processor reads the BIN to identify the issuing institution and card network. This identification is crucial for routing the transaction request to the appropriate bank for authorization. Without the BIN, payment processing would struggle to determine the origin of funds, making transaction completion difficult.

BIN information is also used in fraud detection. Payment processors and acquiring banks use BIN data to authenticate card details and identify potential fraudulent activities. BINs contribute to data analysis, helping businesses understand customer demographics, spending patterns, and assess transaction risk.

Essential Business Identification Numbers

Businesses require specific identification numbers to operate legally and efficiently, distinct from the Bank Identification Numbers embedded in payment cards. Two primary identifiers are the Merchant ID (MID) and the Employer Identification Number (EIN). Businesses directly obtain these numbers to manage financial operations and tax obligations.

Merchant ID (MID)

A Merchant ID (MID) is a unique, typically 15-digit alphanumeric identifier assigned to a business by its acquiring bank or payment processor. This number is essential for enabling a business to accept credit and debit card payments. The MID acts like an address for funds, ensuring customer payments are correctly routed and deposited into the merchant’s account. Without a MID, a business cannot process card transactions.

To obtain a MID, a business must apply through a payment processor or directly with an acquiring bank. This process involves business verification, including details like business type, estimated transaction volume, banking information, and owner details. Many providers require the business’s Employer Identification Number (EIN) as part of the application. The MID assignment is generally part of setting up a merchant account, a specialized bank account for holding customer payments before they are settled into the business’s main bank account. Businesses can usually find their MID on merchant account statements or payment terminals.

Employer Identification Number (EIN)

An Employer Identification Number (EIN), also known as a Federal Tax ID Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity. This number functions similarly to a Social Security Number (SSN) for individuals, but for businesses. Businesses generally need an EIN to hire employees, open a business bank account, file certain tax returns, and apply for business loans or licenses.

Obtaining an EIN is a free process directly through the IRS. The most common and fastest method is applying online via the IRS website. The online application often provides the EIN immediately upon successful completion. To apply online, the business’s principal location must be within the U.S. or its territories, and the responsible party (the person who owns or controls the business) must have a valid SSN or Individual Taxpayer Identification Number (ITIN).

The online application requires information such as the business’s legal name, trade name (if applicable), physical address, entity type (e.g., sole proprietorship, LLC, corporation, partnership), and the reason for applying. Applicants must also provide details about the business’s primary activities and answer a series of tax-related questions. Upon approval, the EIN confirmation letter can be immediately downloaded or printed for records.

Alternative methods for obtaining an EIN include faxing or mailing Form SS-4, “Application for Employer Identification Number,” to the IRS. Faxing the form generally results in receiving the EIN within four business days. Mailing the application takes considerably longer, with an expected processing time of about four to six weeks. For international applicants, a dedicated phone number is available to apply for an EIN.