Issuing Bank

An issuing bank, also known as an issuing institution or issuer, refers to a financial institution that provides credit or debit cards to individuals or businesses. These cards, commonly known as payment cards, are used by consumers to make purchases, withdraw cash from ATMs, and perform various financial transactions. The issuing bank acts as the primary entity responsible for issuing and managing these cards, ensuring the smooth operation of card-based transactions.

Role and Responsibilities

As the issuer of payment cards, the issuing bank plays a crucial role in the financial services ecosystem. Its primary responsibility is to evaluate the creditworthiness of applicants and decide whether to approve or decline their card applications. This evaluation process involves assessing the applicant’s credit history, income, and other relevant factors to determine their ability to repay the borrowed funds.

Once an application is approved, the issuing bank issues a payment card to the cardholder. This card is linked to the cardholder’s account, allowing them to access a line of credit or use their own funds for purchases. The issuing bank also assigns a credit limit, which represents the maximum amount the cardholder can borrow or spend using the card.

Furthermore, the issuing bank is responsible for managing the cardholder’s account, including processing transactions, maintaining account records, and sending periodic statements summarizing the cardholder’s activities. They also handle customer inquiries, disputes, and fraud prevention, ensuring the security and integrity of the payment card system.

Relationship with Card Associations

Issuing banks are typically affiliated with card associations such as Visa, Mastercard, or American Express. These associations provide the infrastructure and network that enable cardholders to use their payment cards at various merchants worldwide. The issuing bank, as a member of the association, ensures compliance with the association’s rules and regulations, facilitating seamless transactions between cardholders and merchants.

Revenue Generation

Issuing banks generate revenue through various means. They may charge annual fees, transaction fees, interest on outstanding balances, and penalty fees for late payments or exceeding credit limits. Additionally, they earn interchange fees, a percentage of each transaction, from the merchant’s acquiring bank when a cardholder makes a purchase.


In summary, an issuing bank is a financial institution that provides payment cards to individuals and businesses. It assumes the role of evaluating applicants, approving card applications, setting credit limits, managing accounts, and ensuring the security of card-based transactions. By collaborating with card associations, issuing banks enable cardholders to use their cards globally. Through various fees and revenue streams, issuing banks maintain profitability while offering convenient payment solutions to consumers and facilitating economic growth.