BIN Sponsorship for FinTechs

If you’re planning to launch a financial product or service, you’ll need to meet a variety of regulatory requirements and apply for relevant licenses. BIN sponsorship streamlines this process and allows you to launch branded cards without gaining an e-money licence or joining a scheme directly.

As a result, companies can introduce a wider range of financial products and services, diversify their market offering, generate increased revenue, and simplify expansion. Read on to discover how BIN sponsorship services work and find out if it’s the right solution for your FinTech business.

What Is BIN (Bank Identification Number)?

A Bank Identification Number (BIN) is the first 4-6 digits seen on payment cards, such as debit cards, credit cards, and pre-paid cards. These numbers identify the card issuer and enable transactions to be processed more quickly.

When you make a purchase online and input your card details, for example, the BIN clarifies:

• What card network is being used
• The issuing company’s country
• The card type
• The card level

Once a transaction has been started, the card issuer is automatically asked to approve or reject it. The BIN enables the processing system to determine whether the card is active and if funds are available, thus enabling the issuer to approve or deny the transaction.

This process allows transactions to be sanctioned (or denied) quickly, thus accelerating both in-store and online payments. In addition to this, the use of bank identification numbers also reduces the risk of fraud and enhances payment security, as the validation process involves comparing the card issuer’s data with the cardholder’s data.

BINs are widely used throughout the industry and are an integral element of facilitating card-based payments. In fact, every payment card you own will feature a bank identification number.

What Is BIN Sponsorship?

When a company wants to launch a financial product or service, they typically have to do one of two things:

• Apply for an Electronic Money Institution (EMI) licence
• Become a direct member of a card scheme (e.g., Mastercard or VISA)

However, these options can be time-consuming and costly. It can take up to a year to apply for an EMI (e-money) licence, for example, which means fast-growing businesses are forced to scale back their plans until they get the requisite licence. Similarly, becoming a direct member of a major card scheme often entails paying high fees and meeting challenging eligibility requirements, which is unattractive for new or growing businesses.

BIN sponsorship provides an alternative solution that enables businesses to launch financial solutions without securing an EMI licence or becoming a direct member of a card scheme.

Instead, a BIN sponsor, like PayAlly, acts as an intermediary between the business and the card scheme, thus enabling the business to use a bank identification number without paying high fees or waiting months for complex application processes to be completed.

As a Principal Scheme Member, a BIN sponsor has established links with one or more card schemes and is authorised to provide BIN sponsorship services to third parties. For example, PayAlly is a principal member of Mastercard’s network, and can, therefore, sponsor their clients to use approved BINs.

What Does a BIN Sponsor Do?

First and foremost, a BIN sponsor gives you access to an established card network, such as Mastercard. As major card networks are the backbone of the industry, successful financial products are usually associated with one or more of them, which is why being authorised to use a BIN is vital.

However, BIN sponsors do more than simply provide access to a card network. In addition to this, your BIN sponsor will undertake a variety of tasks, such as:

• Coordinate integration with a payment processer
• Ensure regulatory compliance
• Ensure compliance with scheme requirements
• Check ‘Know Your Customer’ (KYC) protocols meet anti-money laundering (AML) requirements
• Facilitate the clearing and settlement of funds

As you can see, BIN sponsorship provides you with much more than simply access to an established card network; it also makes it easy for you to meet the requirements of the card scheme and maintain compliance.

What Are the Benefits of BIN Sponsorship?

BIN sponsorship is a viable way for businesses to access the bank identification number they need to launch financial products and services, but is it the best way?

Take a look at some of the benefits of BIN sponsorship to determine if it’s right for your business:

Faster Launch Process

The FinTech industry is evolving rapidly so getting your product to market quickly is always going to be a top priority. If you want to launch a new card or payment service, for example, you won’t be able to do so until you’re authorised to use a BIN – so speed really is of the essence.

Applying for an e-money licence or to become a member of a card scheme takes time and it’s not unusual for businesses to spend months going through the onerous applications process. In contrast, BIN sponsorship can enable companies to become authorised to use a BIN in a fraction of this time.

As a result, you can get your product to market more quickly, expand your operations, and start generating increased revenue!

Lower Costs

Becoming a direct member of an established card scheme, like Mastercard or VISA, can be costly and, when you factor in the resources you’ll use trying to satisfy the requirements for an EMI licence, it’s easy to see why many startups simply run out of time and funds.

Fortunately, BIN sponsorship provides a simpler and cheaper way for businesses to launch payment cards and services. By working with a BIN sponsor, you can avoid the high fees and complexities associated with direct scheme membership and licensure and fast-track the process at a lower cost.

Streamlined Management

Even if you’re prepared to invest the time and money in applying for an EMI licence or becoming a direct member of a card scheme, you’ll need to consider how you’ll achieve and maintain compliance. As a scheme member, for example, you’ll need to remain compliant with scheme requirements, as well as regulatory requirements that govern how you operate.

When you use BIN sponsorship, however, your sponsor will take an active role in providing compliance and management services. When your sponsor undertakes requisite reporting and submits this data to the card scheme in accordance with its requirements, for example, this is one less thing for you to worry about.

With streamlined management and consistent access to expert support, you can minimise the burden on your business and ensure that you’re always operating in compliance with relevant contractual and legislative regulations.

Integrated Solutions

While BIN sponsorship can be a critical element of your operations, it needn’t be viewed in isolation. When you combine BIN sponsorship with other financial solutions, such as white label card issuing or payment processing, for example, you can access a holistic infrastructure that delivers the features and functionalities you need to support your own financial product and service.

Finding the Right BIN Sponsor

Although BIN sponsorship always tends to work in the same way, this doesn’t necessarily mean that all BIN sponsors are created equal. To ensure you have access to the best sponsorship solutions for your company’s needs, be sure to consider these factors before requesting sponsorship:

Access to Card Networks

Some BIN sponsors provide access to more than one card network, which can be beneficial for companies that want to offer more than type of card. Alternatively, you may already have a clear idea of which card scheme you want to use. Either way, it’s worth checking that your preferred BIN sponsor can provide you with access to the network(s) of your choice.

Permissions and Licences

Some BIN sponsors are only permitted to operate in particular countries or jurisdictions, which could hold you back if you plan on launching your new financial product globally. By choosing a BIN sponsor that already has global permissions and licences in place, you can ensure that you don’t encounter setbacks further along your journey.

Expert Support and Advice

Don’t underestimate the value of expert advice, regardless of where you are in your go-to-market strategy. With a dedicated Relationship Manager for every client, PayAlly ensures that expert advice is always available. Whether you’re learning more about BIN sponsorship, switching to a new sponsor or you want to grow your business with compatible financial solutions, our team is on hand to provide the support you need.

Growth Potential

As your brand takes off, you’ll want to explore growth opportunities to maximise your success. By choosing a BIN sponsor who can facilitate this growth, you’ll simplify and accelerate your expansion. Partnering with a BIN sponsor who understands your company’s long-term objectives can be a critical factor in your overall success, so choose wisely if you want to realise your potential.

BIN Sponsorship from PayAlly

With BIN sponsorship from PayAlly, you can fast-track the launch of your new FinTech products and accelerate your company’s expansion. To find out more, talk to our expert team about our BIN sponsorship services now.