Issuing banks—also known as card issuing banks or issuers—are the banks or financial institutions that offer payment cards to consumers on behalf of card brands. Issuers sit at both the beginning and end of the card payment lifecycle.

Issuers and Cardholders

Card issuing banks provide one of the following to customers or cardholders on behalf of a card brand:

• The line of credit behind a credit card
• The bank account for a debit card
• Support for a prepaid card

In offering these cards to cardholders, issuing banks agree to carry out a number of checks (e.g. verify the cardholder has sufficient funds and the transaction isn’t fraudulent, etc.) before authorizing or denying payments for the cardholder. Only once the issuing bank approves a transaction, do they transfer money to the acquiring bank for the goods or service in question. Acquiring banks then front the money to merchants—minus interchange fees, which they pay back to the issuer to help offset the costs of card benefits and the risk of non-payment due to fraud.

Both card issuers and acquiring banks operate under the rules and regulations established by card brands. These rules govern how these players process transactions and manage financial risk, thus ensuring consumers perceive value in using these cards. To reduce the risk of non-payment, for example, card brand rules state merchants must send requests to the issuer before completing a sale; with these requests, they must also include specific data to help the issuer assess the risk of fraud. The rules and types of data that merchants must collect and pass to the issuers can vary based on the type of transaction, the type of business the merchant has, and the card type the customer was issued by the issuer.

Chargebacks

At a basic level, chargebacks occur when a cardholder claims they aren’t responsible for a charge and files an official dispute with their issuing bank. The issuing bank then submits the chargeback to the acquiring bank who works with the associated merchant to resolve the chargeback or submit evidence against it. Ultimately the issuer has the final say as to the validity of the charge and can either accept the evidence or stand by their original decision.

Issuers can also initiate chargebacks for various processing errors—these are known as bank chargebacks. When an issuer initiates the chargeback process for a bank chargeback, they generally do so without advising the cardholder. Some of these disputes will be resolved between the acquirer and issuer, while others will require the merchant’s involvement.

Learn more about chargebacks in The Chargeback Lifecycle.

Issuers and BINs

You can map a payment card back to the correct issuer using the card’s bank identification number (BIN). Until April 2022, the first six digits of a card’s primary account number (PAN) represented a card’s BIN. For cards issued after April 2022, however, you can identify the issuer by the first eight digits of the card’s PAN. For more information about the switch from 6-digit to 8-digit BINs, see this post from the Pagos Blog.

Issuers register their BINS, and in doing so must identify the card type, product type (e.g. credit, debit, prepaid), country of issue, and currency of issue for each card. If the issuing currency is the same as your transaction currency and the card product is a credit, debit, prepaid, or virtual card, the BIN data also includes the name of the issuing bank.

BIN data is very useful in getting to know who your customers are and how you can optimize your payments strategy to best accommodate them. Learn more about BIN data use cases in the Pagos Blog.