Who is an issuer?

Who is an issuer?

An Issuer is the bank who issues you the credit card, debit card or any payment card for that matter. They are sometimes referred to as the Issuing Bank as well. For example, if you have a Chase Freedom card, then your Issuer is Chase bank. If you own a Capital One Platinum card, then your Issuer is Capital One bank.

What if you have a Marriott Rewards credit card? No, Marriott is not your issuing bank. In general, when you get a credit card from an establishment other than a bank, maybe from a merchant like Marriott, it is only because they have tied up with some bank. It is the bank that manages the back-end work, while the branding is done with the merchant’s name on it. In the case of Marriott, the issuing bank is Chase.

Also, remember that Visa and Master Card are not issuers. They are called Card Networks, or more generally, the Payment Networks. We will discuss them in another post.

In the context of a payment transaction, an Issuer is the entity that authorizes the transaction when you swipe your card at a point of sale. They pay the merchant from their customer’s account through a process called Clearing and Settlement. They also charge Interchange fees, which is generally collected from the merchant. Bank of America, Chase and Wells Fargo are a few of the largest Issuers.

Sometimes Issuers outsource card processing activities to external entities called Issuer Processors. Issuer Processors may take on some or all the activities of card processing from the Issuer depending on their contract. First Data, FIS and TSYS are examples of Issuer Processors.