Issuer

An issuing bank or issuer is a bank or financial institution that issues credit or debit cards on behalf of credit card schemes such as Visa, Mastercard and American Express. Payments using the card are debited to the holder’s bank account at the issuing bank.

The other side of the payments equation is the acquiring bank. This is the bank that receives payment from the customer’s bank account on behalf of the merchant.

When a customer decides to complete payment using a credit or debit card, the merchant's acquiring bank requests a transfer of funds from the bank account associated with the customer’s card at the issuing bank.

The issuer will evaluate the transaction and either authorize or refuse it. Reasons for refusing a transaction include a lack of funds or suspected fraud. If the payment is authorized successfully, the payment is transferred from the customer’s account at the issuing bank to the merchant’s account at the acquiring bank.

Transactions can be refused by the issuing bank for a number of reasons. This can be due to a lack of funds. As part of the payment authorization process, issuers verify that the consumer has sufficient funds in their account to cover the transaction. Another common reason is that information is incorrect, such as the CVV (Card Verification Value) or address not matching the card’s details. This typically happens as the result of the wrong details being entered at checkout.

Transactions can also be refused to prevent fraud. For example, if a card has been reported as lost or stolen, the transaction will not be accepted. The same also applies to cards that have expired.

A transaction may be refused if it is flagged as “unusual activity”. This often affects international transactions where the card is used in another country or shopping in suspicious areas.