Non-Traditional BINs

Over the past decade, the debit landscape has transformed for merchants. A large and yet underexplored contributing factor is the increasing popularity and use of fintech providers. The likes of BNPL providers, Neobanks, and on-demand platforms, have introduced new debit, prepaid, and virtual cards into the payments mix, meaning today’s ‘debit optimization’ strategy must look very different from the cost-first approaches of the past.

Often prepaid or non-traditional debit products, these cards may face varied approval rates due to user funding sources, and if not properly handled, could be routed down more expensive rails. Furthermore, CMSPI observes that certain token and digital wallet BINs may exhibit lower levels of network availability, impacting merchant routing strategies as volumes on these BINs rise.

This blog will explore how these non-traditional BINs require a highly nuanced routing strategy to account for their unique behaviors and structures. We will examine how merchants can diagnose and work to mitigate rising issues surrounding these transactions, focusing on approval rate volatility, PIN prompting optimization, and network availability gaps in tokenized wallet setups.

Approval Rate Considerations

With non-traditional BINs comes a level of approval rate inconsistency largely due to how these accounts are funded and used. Neobank and platform-issued debit products may be linked to stored-value systems or “topped-up” balances that fluctuate based on user activity and availability of funds. As such, these BINs may exhibit lower approval rates as declines can stem from insufficient funds rather than fraudulent activity.

The challenge arises due to the fact that the problem may not show up at the network level. As shown in Figure 1, network-level approval rates are degraded when certain fintech-issued BINs are disproportionately routed to a certain network. Aggregate data might show stable approval rates for a network overall, masking the real approvals rates for specific BIN ranges tied to fintech programs. Merchants who monitor routing performance at the network level risk missing these details and implementing routing strategies based on half of the picture. The key to merchant success is focusing on BIN-level performance monitoring, tracking approvals, cost, and refund patterns by issuer range rather than by network average.

PIN Prompting Strategies

There are many cases to account for when building out a PIN prompting strategy while keeping non-traditional BINs in mind. In a traditional setup, PIN and PINless debit tend to have the lowest interchange rates, and as such, merchants treat it as a secure, low-cost option. This logic flips with certain fintech-issued BINs. Routing to the signature networks can be the more effective option as these BINs may be badged with premium interchange subtypes for PIN and PINless debit, where signature rates can be the real least cost route (Figure 2). When merchants prompt for PIN across the board or prioritize PINless rails in the case of CNP, they might unknowingly push these transactions into more expensive routes.

The central takeaway is that analyzing approval rates and routing purely at the network level is no longer sufficient. The trend across the industry shows that routing at the BIN-level is necessary for true least-cost routing and avoiding erosion of savings.

Network Availability (Tokens and Digital Wallets)

Another point of friction for merchants lies in how tokenization and digital wallets complicate BIN-level routing logic. Pass-through wallets with an underlying funding source operate as tokenized transactions. This process is meant to facilitate secure transacting, preventing outside parties from viewing the true card number, also known as FPANs, by replacing it with a token BIN, also known as a DPAN for digital wallet transactions. CMSPI has observed that domestic network availability and performance may fall in comparison to network availability on FPANs and DPANs, or tokenized BINs. However, CMSPI has worked across the supply chain, utilizing our data to shed light on these gaps, to improve network availability. Via industry collaboration, we have observed a 3x increase in network availability on certain DPANs, demonstrating the importance of collaboration and granular data in mitigating these challenges.

For each merchant, as digital wallet transactions continue to grow in volume, understanding network availability by BIN is vital to optimized routing logic and working with your supply chain to remedy these limitations.

Getting Ahead of Challenges

With new platforms becoming increasingly popular amongst consumers, debit routing assumptions and rules of the past are no longer reliable. Looking forward, the divide between traditional and non-traditional BINs may widen, with agentic commerce platforms like Perplexity shifting the merchant-of-record dynamic. To stay ahead, merchants must anticipate these shifts, grounding every routing strategy in a detailed understanding of their payments stack.