Issuer or Issuing Bank

An issuing bank is the cardholder’s bank. It issues payment cards to authorized consumers.

As a member of the card associations (Visa®, Mastercard®, etc.), issuing banks are authorized to issue payment cards on the associations’ behalf. Issuing banks act as liaisons so cardholders don’t have to deal with card associations and acquirers directly.

These entities are more accurately referred to as ‘issuers’ rather than ‘issuing bank’, as not all institutions that provide payment cards are banks. For example, American Express is a card association that has elected to issue cards directly to cardholders themselves.

What Does an Issuer Do?

An issuer will perform the following duties:

  • Approve or deny credit card applications
  • Set account terms such as credit limits, annual percentage rate (APR), benefits, and repayment plans
  • Transfer funds to the merchant’s acquiring bank in the event of a payment card purchase
  • Initiate chargebacks for processing and authorization errors
  • Facilitate cardholder disputes and chargeback requests
  • Review merchants’ chargeback representment cases

Also referred to as:

  • Customer’s bank
  • Issuer

Visit our blog article to learn more about issuing banks and how they differ from acquirers.

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