While many individuals have used credit cards for years, several aspects of their functionality remain obscure. Recently, a software engineer working as a solution architect at an MNC and an avid online shopper shared a thread on X (formerly Twitter), explaining how credit card numbers work. Furthermore, FinPal also posted on X, asking how online portals like Amazon and Flipkart instantly determine if a credit card number is valid and what bank offers are available. FinPal explained that credit card numbers are not random. They are generated using a hidden algorithm to facilitate quick validation and banking processes.
To validate a credit card number, banks use the Luhn Algorithm. The algorithm checks if the sum of all the numbers (after doubling every second digit) is divisible by 10. If the sum is divisible by 10, the credit card number is valid. Banks use the BIN (Bank Identification Number) system. The first 6 to 8 digits of the card number tell the portal who issued the card, and the portal uses the BIN range to check if offers are available on your card. The first digit provides information on the Major Industry Identifier (MII), which identifies the card network. The first 6-8 digits are the BIN (Bank Identification Number), providing information about the bank and card type, such as Visa Infinite and a specific card like HDFC Infinia.
