BIN Sponsorship: Advantages And Disadvantages Of The Service
by Ankita Tripathy Finance 29 November 2023
Nowadays, it is difficult to find an industry in which there would not be fierce competition. To become as attractive as possible for customers and stand out from the crowd, businesses need to offer more than just favorable terms of cooperation but to provide quality service.
An in-house card program will help raise service standards and quality. One can issue these cards for mutual settlements with customers, suppliers, and partners. These can be own loyalty, savings, debit, or credit cards issued under the company’s brand.
It is convenient and profitable to have your own card program, and there is no need to convince anyone about it, but why does not every company use this resource to increase its competitiveness in the market? The thing is that card issuing is possible only after obtaining a bank identification number or BIN.
What Is BIN, And What Is It For?
To put it simply, BIN is a 6-digit number that identifies the card issuer in the payment system. The system uses it to identify the institution that issued the payment instrument during its authorization and the processing of card transactions.
The BIN was developed by the International Organisation for Standardisation and the American Standards Institute. The 6 digits of the number contain the following information:
● data about the payment system that owns the card;
● the type of institution that is responsible for payment card issuing;
● type of card (credit, debit, prepaid, gift, etc.);
● card category (Classic, Gold, Platinum);
● card issuing place and issuer’s location, etc.
The payment system ensures smooth transaction processing and prevents fraudulent transactions thanks to quick access to this information through the BIN number.
How To Get A BIN?
You must first obtain a BIN number to run your card program. As we have already learned, it is easy to do it in 2 ways. The first way is to apply for a BIN number yourself to the payment system of your choice. This method is for those who are not looking for easy ways. It is very complicated, time-consuming, and costly. The fact is that financial institutions that provide numbers require the fulfillment of many different conditions:
● correctly fill out and constantly maintain a large number of various documents;
● pay registration fees;
● obtain various certificates;
● incur associated costs;
● maintain supporting documentation;
● maintain records;
● monitor compliance with the company’s regulatory requirements.
It may take 3 to 6 months from when an application for a BIN number is submitted to the time it is processed. There is no guarantee that the payment system will approve the application and provide the number.
A more affordable and faster method of obtaining a BIN number is BIN sponsorship. The BIN sponsor provides the identification number immediately after signing the contract, so there is no need to waste time waiting. This is especially important when launching an impulse product. You can learn more about this service at wallester.com, and in this article we will only explore its main advantages and disadvantages.
How does BIN sponsorship work?
Moving forward, a BIN sponsor is an institution that has independently fulfilled all the requirements of the payment system for obtaining BIN numbers, has become a full member, and has the right to provide intermediary services for providing BIN numbers to other companies.
Further, the sponsor undertakes the solution of all issues related to mutual settlements and reporting to the payment system, thus relieving its clients from burdensome administration. It provides the client with a BIN number and a convenient platform through which Co-brand Card issuing is carried out. At the same time, the BIN sponsor itself is responsible for the security and functionality of this resource by introducing the following options and elements:
● Card issuing. These can be physical and virtual cards of any purpose. These cards can be used to make purchases online or in retail outlets, make transfers and instant payments;
● Tokenization. Cards can be tokenized to add them to the most popular digital wallets;
● 3D Secure. The use of this protocol secures e-commerce by requesting an additional verification step from the card issuer during the transaction;
● Payment processing. Processing the payments takes place as quickly as possible, as there is no need to get approval from banking institutions;
● KYC/AML. BIN sponsors comply with all KYC and AML rules and guidelines;
● Fraud monitoring. The BIN sponsor monitors all payment transactions, detecting as well as preventing payment card fraud. It helps in reducing potential financial losses.
The clients of a BIN sponsor are more security-centric and the requirements of the payment system. They immediately start testing the card program and implementing their ideas on the market. All administrative and organizational issues are taken care of by the BIN sponsor.
Who May Need A BIN Sponsor?
BIN-sponsorship as a service may be of interest to any company that needs a stable, fast, and reliable payment scheme to meet the needs of its customers. It can be relevant in industries such as:
Lending. Consumer and peer-to-peer credit providers and business lending institutions can launch a card program. Cards can streamline, speed up, and optimize the loan process;
● E-commerce. With proprietary payment cards, marketplaces fulfill orders much faster;
● Fintech. Companies that have their payment instrument have higher values in the market;
● Tourism. Having a card program helps to speed up mutual settlements of travel agencies with their partners and clients;
● gig-economy. Card programs help in the quick adaptation of new employees and in building strong relationships with partners of gig platforms;
● Insurance. Having your payment instrument speeds up the insurance claims and compensation process.
The card program can be launched for employees as a salary project. Thus, BIN-sponsorship service can interest companies from any industry with a large staff and mutual settlements with customers, partners, and suppliers.
Advantages And Disadvantages Of BIN-Sponsorship
BIN sponsorship has a lot of advantages for clients who want to launch their financial product:
- Time savings. It takes at least six months for the payment system to review the application for a BIN number, while a BIN sponsor provides it immediately after signing the contract. The client does not waste time waiting but immediately proceeds to launch the product on the market and to develop his business.
- Cost savings. BIN sponsor covers all additional costs and related costs associated with obtaining a BIN number. In addition, the client does not spend money on developing the card-issuing platform, maintaining it, or updating it.
- Savings in effort. The client does not have to negotiate with the payment system, deal with reporting to it, or solve administrative issues. In addition, the BIN sponsor assumes obligations to fulfill regulatory requirements and ensure the safety of using the financial product.
In conclusion, BIN sponsorship eliminates the need for independent interaction of the client with the payment system, so the launch of his financial product is much faster and more efficient. It shows that BIN sponsorship has absolutely no disadvantages or pitfalls.
Solid BIN sponsors provide their clients with the White Label Card Issuing option. This option helps to increase brand recognition. Not only the payment cards will have an exclusive design, but also the mobile application and self-service platform. Thus, not just another impersonal product but an exclusive full-fledged solution tailored to a specific industry and company is launched on the market.