An issuing bank is the cardholder’s bank. As a member of the card associations, issuing banks are authorized to issue payment cards on the associations’ behalf to cardholders. Issuing banks act as the cardholder’s liaison with card associations and acquirers.
These entities are more accurately referred to as issuers, 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:
- Contract with cardholders for account hosting and repayment terms
- 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