An Issuer is a bank or financial institution which provides debit, credit, and prepaid cards to consumers on behalf of payment card schemes. Typical payment card schemes include Visa and Mastercard, for example. It is worth noting not all issuers have licences for all these types of card products and it will vary issuer by issuer.

Hang on, what’s a card scheme?

A card scheme uses its rules to transfer the card transaction information from the acquiring bank to the issuing bank (from the merchant to the consumer). It then passes the payment back to the acquirer to confirm the payment.

Credit and debit card schemes work with four parties. Together, these four parties make up an open-loop system that allows consumers to purchase items or services from merchants by letting the banks do all the work on their behalf.

What does the Issuing bank do?

The Issuing Bank provides the debit / credit or prepaid cards from the card scheme to its qualifying customers. Issuers are banks or alternative payment institutions. Even if you want to white label  your card or have a unique card (such as a branded loyalty card, or prepaid gift card), there is a bank or financial institution behind the card.

So how does the payments process work?

When you buy  a product or service from a shop (called a merchant) with your card, the details of the transaction is transferred to the acquirer which then contacts the relevant card scheme (eg Visa / Mastercard) and the issuer to collect the money. The issuing bank is between cardholders, card schemes, and acquirers. The information sent from the issuer checks whether the payment from the customer is to be accepted or not. The issuer needs to provide approval  as to whether there is enough money to pay for the product or service in the clients account, then transfers money to the acquirer, who then settles with the merchant or shop.

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