What is Personal Identification Number (PIN)?

With the speedy advancement of digital technologies, the number of financial transactions executed through non-cash means using electronic devices such as ATMs has risen considerably. 

People who use credit cards pay for their purchases at stores, pharmacies, gas stations, cafes, hotels, and terminals, and also use them to withdraw money.

To protect payment information from unauthorized access and potential attacks by scammers and fraudsters, a Personal Identification Number (PIN) was created. It is a confidential code that serves to authenticate the cardholder's identity while making transactions.

What is Personal Identification Number (PIN)?

Personal identification numbers (PINs) are commonly used in various electronic financial transactions to enhance security. These PINs are frequently associated with payment cards and may be mandatory to complete a transaction. Primarily, the purpose of using a personal identification number is to add an extra layer of security to the electronic transaction process.

PINs are most commonly used with debit cards that are linked to a person's bank account. When individuals receive their debit cards, they are required to create a unique PIN that they must input every time they withdraw money from an ATM or make payments at merchant stores.

As PINs function similarly to passwords, they are utilized in other scenarios like home security and mobile phones. Essentially, a PIN can be any numerical method employed to authenticate an individual's identity.

PINs in Card Security

Personal identification numbers (PINs) play a crucial role in securing card transactions. Typically ranging from four to six digits, PINs are either generated by the issuing bank through a coding system that ensures their uniqueness or selected by the account holder themselves. When issued, the PIN is usually sent separately from the card by mail or inputted at a local branch during an in-person account opening.

While selecting a PIN, it is essential to choose a unique combination that is difficult for fraudsters to guess but easy for the account holder to recall. Using common information like birthdays, anniversaries, or social security numbers as PINs is not recommended as it could lead to unauthorized access to the account. It is crucial for account-holders to be vigilant and keep their PINs confidential to avoid any unwanted access to their bank accounts.

The Role of PINs in Electronic Transactions with Merchants

When it comes to electronic transactions with merchants, there are several entities involved, including the merchant, the merchant acquiring bank, the processing network, and the issuing bank. In order to add an additional layer of identification for the buyer and make transactions more secure, the use of a PIN number is commonly required as the final step in a payment.

Merchants typically require a PIN at the point of sale, but not for online purchases. Once the PIN is entered and approval is given, communication is sent to the merchant acquiring bank to facilitate the settlement of the payment. The processing network then contacts the cardholder's issuing bank, which conducts additional security checks to prevent fraud and ensure that there are sufficient funds available to cover the payment.

To further ensure the safety of the transaction, the issuing bank takes additional security precautions when receiving communication from the merchant. Once the transaction is confirmed by the issuing bank, communication is sent through the processor to the merchant acquiring bank, who then notifies the merchant and initiates settlement on the transaction.

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