Most of us don’t think a lot about the first few digits on our payment cards. Yet these are the very numbers that keep global commerce flowing smoothly. Known as BINs, Bank Identification Numbers allow payment networks to identify a card’s type (such as debit or credit), the institution that issued it and the necessary information to help move your money securely through the financial ecosystem. With little fanfare, BINs have kept payments moving since the 1970s. 

Meanwhile, in the past decade, fintechs have burst onto the scene, offering consumers innovative new ways to pay back their friends, make purchases digitally or start a side hustle. But since most fintechs are not traditional banks, they do not have access to managing their own BINs, which in turn prevents them from creating payment credentials for their customers.

Which is where BIN sponsorship comes in. Payment networks, such as Mastercard, encourage partnerships so that more established financial institutions can ally with fintechs and others to issue cards.

BIN sponsorship has been wildly popular among fintechs, an arrangement that allows them to focus on their core strengths and drive growth. Last year alone, fintech revenues jumped by 21%, according to Boston Consulting Group and QED Investors.

Now Mastercard is enabling choice to help our partners go to the next level, with a new set of guidelines to govern the world of BIN sponsorships. We are setting oversight structures, creating more transparency with BIN assignments and defining the roles of each player in the process. This approach ensures everyone leveraging BIN sponsorship knows what their role is, what the rules are and how to help each other succeed.

One of the key benefits of fintech growth and innovation it gives people more choice in  how they move and manage their money.

“This is some of the fastest growth we are seeing,” says Stefany Bello, Mastercard’s head of digital partnerships for fintech and enablers in the Americas. “But it is equally important for us, as the orchestrator of the ecosystem, to develop the right standards and be able to monitor these programs.”

This approach creates a win-win from the start. It adds greater clarity to who has control and is managing a BIN, ensuring that payments can be processed accurately and securely. And, given the booming nature of the fintech industry, these rules help prevent fallout for banks and consumers if a startup fails.

“Like many innovative things, this is a space that’s growing and evolving quickly,” says Rich Audet, vice president of Franchise customer enablement at Mastercard. “This approach enables us to fuel new growth without compromising on our ability to manage and mitigate risk to our customers and cardholders.”

The value proposition is unmistakable: Innovative new fintechs can reach newer market segments that haven’t been tapped yet (such as the unbanked). When they can work together with more established players, that’s a powerful alliance.

For instance, Lead Bank, headquartered in Kansas City, Missouri, is a key infrastructure provider for fintech and other companies looking to embed banking services into their products. As they provide solutions for businesses, including corporate card issuance, Lead Bank takes advantage of BIN sponsorship and settlement to act as a banking as a service provider. 

"When partners are willing to work creatively, we can build new and exciting financial products for customers, and we can do so quickly," says Erica Khalili, chief legal officer at Lead Bank. "BINs are a particularly innovative way for banks and fintechs to work together to support emerging client needs."

The new framework smooths out the runway for these partnerships to take off, increasing transparency and helping speed up the flow of innovation. After all, more traditional financial institutions can often move quicker on getting new ideas to market when partnering with fintechs. 

From the fintech’s perspective, BIN sponsorship is an opportunity that just makes sense. and which may set the stage for more collaboration and innovation in the future.

For instance, some fintechs may not be aware that each partner needs its own BIN and that a BIN shouldn’t be used for multiple initiatives. But with the guidance offered by the BIN sponsorship guidelines from the outset, these companies can avoid costly mistakes and reap the benefits of greater clarity for all transactions. Perhaps most importantly, the greater order and transparency this guidance brings allows different parties to feel more comfortable teaming up with new partners.

“What excites me most is how quickly this space is growing,” Bello says. “These new players are fast and they are shaking up financial services. With the right oversight, we are speeding up the process to take new programs to market.”