# Understanding Personal Identification Numbers (PINs) and Their Uses

![Personal Identification Number (PIN): A numerical code used in many electronic financial transactions.](https://www.investopedia.com/thmb/M-A0UIEET7FxlWZNE6NOCFByToA=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/personal-identification-number-FINAL-7c3eb9e610174683a6a99ba9f09b8fb6.png)

*— Investopedia / Jiaqi Zhou*

> **Definition**
>
> A personal identification number (PIN) is a numerical code used to authenticate a user's identity during electronic financial transactions, primarily associated with payment cards.

## What Is a Personal Identification Number (PIN)?

A personal identification number (PIN) is [a numerical code used in many electronic financial transactions](https://www.investopedia.com/terms/r/reference-number.asp). Personal identification numbers are usually issued in association with payment cards and may be required to complete a transaction. The purpose of a personal identification number (PIN) is to add additional security to the electronic transaction process.

### Key Takeaways

*   Personal Identification Numbers (PINs) typically consist of four to six digits and are used to enhance security during various electronic financial transactions, most notably with debit card withdrawals and purchases.  
    
*   A PIN serves as a quick and simple method of identity verification, similar to passwords, but are mostly numerical; they are employed across numerous applications, including debit card transactions, mobile devices, and even tax filing.  
    
*   Choosing a PIN that's challenging to guess yet easy to remember is vital. Avoid using predictable numbers like birthdates; instead, opt for longer, non-sequential digits, and consider changing your PIN regularly for enhanced security.  
    
*   While both PINs and passwords provide security, passwords are typically more complex, often involving a combination of numbers, letters, and symbols, and they offer more robust protection for online accounts.  
    
*   In merchant transactions, the use of a PIN at the point of sale (POS) provides an additional security layer, ensuring stronger authorization processes that protect against fraudulent activities.

## How Personal Identification Numbers (PINs) Enhance Financial Security

Personal identification numbers add security to accounts and are mostly used with [debit cards](https://www.investopedia.com/terms/d/debitcard.asp) connected to bank accounts. When a person is issued a debit card, they are required to choose a unique personal identification number (PIN) that they will need to enter every time they wish to [withdraw](https://www.investopedia.com/terms/w/withdrawal.asp) money from an ATM and, oftentimes, when they make payments at various merchant stores.

As PINs are like passwords, they are also used in many other instances, such as home security and mobile phones. A PIN is basically any numerical method used to verify an individual's identity. Credit cards will verify identity after a user is prompted to enter their identification number. The system uses the [Luhn algorithm](https://www.investopedia.com/terms/l/luhn-algorithm.asp) to compute and compare the given number to the valid identity.

> **Important**
>
> The IRS often requires an identify protection PIN when filing your electronic or paper tax return. This PIN is a six-digit number and can be obtained via the IRS website.

## Strengthening Card Security with Personal Identification Numbers (PINs)

PINs are usually four to six digits long and are either assigned by the bank or chosen by the account holder. Typically, a PIN is issued to a cardholder by mail separately from the associated card or punched in at a local branch when opening an account in person.

When selecting a PIN, pick one that's hard to guess but easy to remember. Short, basic PINs are advised against, such as using "123" or numbers that would be easy to guess in instances of [fraud](https://www.investopedia.com/terms/f/fraud.asp); common information, such as an account holder's birthday, marriage anniversary, or [Social Security Number](https://www.investopedia.com/terms/s/ssn.asp). It is crucial that account-holders be cautious about sharing or disclosing their personal identification number to prevent unwanted access to their bank accounts.

## The Role of Personal Identification Numbers (PINs) in Electronic Transaction Processing

Electronic transactions with merchants are slightly more complex than standard ATM transactions. Merchant transactions involve the merchant, acquiring bank, processing network, and issuing bank. Using a PIN makes transactions more secure by adding an extra identification step for the buyer.

PINs are commonly required as the final step in a payment, giving a merchant the approval to process a card for payment. A PIN is usually only required by the merchant at the [point of sale](https://www.investopedia.com/terms/p/point-of-sale.asp) as opposed to being required for online purchases. Once approval is given to process a card, communication is sent to the merchant acquiring bank, which facilitates the settlement of the payment.

After entering the processing network, the bank can contact the cardholder's issuing bank. The issuing bank does additional security checks on the transaction to ensure that it is not fraudulent. They also confirm that the funds are available in a cardholder’s account to cover the payment.

The issuing bank takes [additional security precautions](https://www.investopedia.com/terms/m/message-authentication-code.asp) when receiving transaction communication from a merchant in order to ensure the safety of the transaction. Once confirmed by the issuing bank, communication is sent through the processor to the merchant acquiring bank who notifies the merchant and begins settlement on the transaction.

> **Tip**
>
> Some PINs may disallow the use of certain features such as duplicated digits, sequential digits, or re-using the same PIN from before.

## Comparing Personal Identification Numbers (PINs) and Passwords for Security

Although both a PIN and a [password](https://www.investopedia.com/best-password-managers-5080381) are critical elements related to security, there are some important differences between a PIN and password. A PIN is typically a sequence of digits, while a password can be longer and contain a combination of letters, numbers, and symbols. A PIN is also usually shorter or usually have a more limited length allowed compared to a password with more characters.

Due to length and characters, a password is simply more complex. It can usually or require use of both upper case letters, lower case letters, numbers, or symbols. It may also require a combination of any of the options above. Thus, a password is better for securing access to devices, online accounts, or networks needing strong security. A PIN is more suitable for a faster and easier access.

There are potential technical differences between a PIN and a password. A PIN more often is stored locally on a device which operates with less security. On the other hand, a password may be stored externally on a secure server. A password may also more commonly be encrypted, hashed, or require multi-factor authentication to retrieve. Therefore, a password is simply a more securely protected authorization tool.

## Best Practices for Creating Strong Personal Identification Numbers (PINs)

While your PIN should be easy to remember, avoid certain common pitfalls. Avoid using obvious combinations such as "0000" as these are the most common PIN numbers and are easy to guess. Choose a random number combination that's memorable for you but not others. It's often advised to not use personal information like your birthdate, phone number, or social security number as these can also be easily guessed or obtained via personal documents.

Sometimes, you may have the option of choosing the own length of your PIN. If this is the case, choose a PIN that is longer than four digits. A longer PIN will make it more difficult for someone to guess or hack, although there are ways to leverage technology to brute force guess a PIN. In addition, avoid repeating digits or consecutive numbers. For example, "1212" or "1234" should be avoided. If it's an option, mix numbers and letters to make it even more secure. However, make sure that you can easily remember the combination.

Last, consider changing your PIN regularly. If someone is able to guess your PIN, you may not know that they have been accessing your account. By changing your PIN regularly, you may be incidentally stopping unknown unknown unauthorized access.

## How Do I Find My PIN Number?

If you've forgotten your PIN number, consider contacting your bank. You'll likely have to verify your identity, but a customer service representative should be able to help you reset your PIN.

## Do All Debit Cards Have a PIN?

Yes, all debit cards require a PIN number. However, be mindful that not all debit card transactions require the use of a PIN number. The transaction itself, your recent purchasing history, or the vendor purchasing from may influence the security checks implemented by the issuing bank.

## Is My Debit Card's CVV Number the Same as a PIN?

No, a debit card's CVV number is different from a PIN. A CVV is used when making payments online or over the phone to verify the physical card's information. A PIN is more useful to authorize in-person transactions to ensure the user using the card is an authorized person that is allowed to spend using the card.

## How Do I Activate My Debit Card PIN?

To activate a debit card PIN, you often must enter your card at an ATM or use it in a transaction. You may be prompted to enter the debit card number, then you can follow the instructions to set your PIN. In other cases, you may be given a phone number to call to verify and activate your card. As part of that phone call, you may be asked to establish a PIN.

## The Bottom Line

A personal identification number is an often-numeric code used for authentication purposes to access a device, a system, or an account. It's typically a four to six digit code and is a simple way to authenticate a user. It is also used to secure certain features and functions of the device or account.

> **Article Sources**
>
> 1.  Internal Revenue Service. "[Get An Identity Protection PIN (IP PIN).](https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin)"