In addition, the first 6 digits of the credit card number are
known as the Bank Identification Number (BIN). These identify the
institution that issued the card to the card holder.
Some credit card issuers choose to restrict the card numbers they
issue to those which pass a checksum test, where the final digit
of the card number is used to confirm the initial digits. This
has two benefits of preventing casual attempts to invent credit
numbers (only one in ten will be valid), and also prevent mistakes
when the card number is manually recorded. The checksum test for
credit card numbers is the Luhn formula, described in Annex B to
ISO/IEC 7812, Part 1.
Potential Benefits of Credit Cards
As well as convenient, accessible credit, the cards offer consumers
an easy way to track expenses, which is necessary both for monitoring
personal expenditures and the tracking of work-related expenses
for taxation and reimbursement purposes. They have now spread
worldwide, and are offered in a huge variety of permutations
with differing credit limits, repayment arrangements (some cards
offer interest-free periods, while others do not but compensate
with much lower interest rates), and other perks (such as rewards
schemes in which points "earned" for purchasing goods
with the card can be reclaimed for further goods and services).
In addition, some countries such as the United
States limit the amount that a consumer can be held liable for
which shifts the liability to the merchant. This encourages the
use of credit cards for electronic and mail order transactions,
collectively called "card not present" transactions.
For further security, some banks are offering one-time numbers
for use in these transactions. They have spread far and wide beyond
their initial market of the wealthy businessman and are now ubiquitous
amongst the middle class of most Western countries.