Issuer

The issuer, or issuing bank, sets the terms of the card, including the credit limit, interest rate, fees and rewards. When the cardholder makes a purchase, the issuer decides whether to approve it, based on available funds or credit and fraud checks.

The issuer pays the merchant's acquirer for approved transactions, through the card network, and then collects the money from the cardholder, either immediately from a debit account or through a monthly credit card bill.

For example, when a customer pays with a credit card, the issuing bank checks the account, approves the purchase within seconds and later bills the customer. It earns income from interest, annual fees and interchange fees paid by merchants' banks.

Issuers handle disputes and chargebacks and are responsible for protecting cardholders from fraud. In securities markets, the term issuer has a different meaning: a company, government or other organisation that issues shares, bonds or other securities to investors.