An issuing bank is a bank that produces currency, securities, or bank cards. Central banks of countries are responsible for issuing money, so this term usually refers to a bank that produces bank cards. An issuing bank services the bank card, monitors all processes related to it and guarantees the fulfillment of payment obligations. Bank customers only receive the right to use the bank card, while the financial institution remains its owner.
The functions of an issuing bank are not limited to just issuing bank cards—it is an important link for organizing settlement operations. When you pay with a bank card in a store, it is the issuing bank that receives a request from the point of sale to process the transaction. The bank verifies the security of the payment, the functionality of the bank card, and the availability of sufficient funds on it. For the safety of funds, the issuing bank may request confirmation from the client for the transaction, such as via SMS, call, or mobile application. If everything is good and the requirements are met, the bank approves the payment. By the way, paying bills and transferring money is also a function of the issuing bank, and the speed of the payment depends on its work.
Another important function of the issuing bank is servicing the client's account. The bank helps to keep a record of funds on the account, recording any financial transactions related to it. The client can request a statement of the movement of funds on the bank card from the bank at any time, and the issuing bank must satisfy this request. The issuing bank is also obliged to advise its clients, answering all questions about the bank's work. At the client's request, the issuing bank must block access to the bank card, for example, if the document has been stolen.
