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Issuing bank

An issuing bank, also known as an issuer, is a bank or a financial institution that issues credit or debit cards to the customers. An issuing bank offers payment cards to customers on behalf of global card networks like Visa, MasterCard, American Express, and Discover.

Behind every online transaction, several parties are involved in making that transaction successful. Two of the major parties involved in every online payment processing are the acquiring bank and the issuing bank.

Where the acquiring banks act as a middleman between the merchants and credit associations, issuing banks act as a middleman between the consumers and the card networks. Contrary to the misconception that card schemes like Visa or MasterCard provide credit and debit cards to customers, the issuing banks issue the payment cards on behalf of the card networks.

What’s the role of an issuing bank?

  • The issuing bank assumes responsibility for paying off liabilities and guaranteeing payments in the event of loss or damage
  • The issuing bank is responsible for authorizing online payment, customer authentication, and ensuring that the cardholder has enough funds to complete the purchase
  • The issuing bank is responsible for recouping the costs if the cardholders cannot pay off their debts
  • The issuing bank is responsible for rigorous risk analysis and subjecting the transaction to predefined security rules
  • The issuing bank is responsible for approving and rejecting credit card applications and providing customer support
  • The issuing bank also handles matters and concerns related to credit card limit, activation, and renewal

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