The term is a bank that issues credit and debit cards to consumers. Typically, these are major commercial banks. However, what’s the role of an issuing bank in the payment process and what are its responsibilities?

An issuing bank, also known as issuer, is a bank or financial institution that offers payment cards to consumers on behalf of the card networks, such as Visa, MasterCard or American Express. The issuing bank extends a line of credit to consumers and is responsible for providing the financial backing for the transactions made with the card.  They assume responsibility for cardholder’s ability to pay off their debt accumulated with the credit card or line of credit.

The bank is also in charge of the consumer’s financial information and account data. What’s more, they offer necessary card maintenance, including card renewal, card limit setting, suspension, blockage and card activation.

Difference Between the Acquirer and Issuer?

The acquiring bank (also merchant bank or acquirer) is the financial institution that maintains the merchant’s bank account. The contract with the acquirer enables merchants to process credit and debit card transactions. The acquiring bank passes the merchant’s transactions along to the applicable issuing banks to receive payment.

The issuing banks is the financial institution that issues credit cards to consumers on behalf of the card networks (Visa, MasterCard). The issuer acts as the middle-man for the consumer and the card network by contracting with the cardholders for the terms of the repayment of transactions.