Recent years have been characterized by explosive distribution of bank cards. Credit and debit, they are issued in large quantities. But who becomes the initiator of the production of this payment instrument, to whom does it bring the greatest benefit? It turns out there is such an institution. This is the issuing bank.
Rather, banks dispersed throughout the country. Their primary task is to provide financial services to citizens and organizations. At some stage, plastic cards began to enter the everyday life of citizens, with which you can pay for goods or services in the complete absence of cash. Naturally, financial institutions could not get past such a tempting prospect and began to master the issue of a new payment instrument.
What is an issuing bank?
The issuing bank is a credit institution issuing and serving plastic payment cards. I must say that this concept of “issuer” previously referred (primarily) to the field of use of a letter of credit as a payment instrument in foreign trade transactions.
However, due to the widespread use of plastic cards, the issuing bank began to be mentioned more often in this connection. For some time, lawmakers have set standards to regulate this area. Now everything is legally regulated here. The main task of the bank now is to provide guarantees for the fulfillment of financial obligations that arise with cardholders.
What is the responsibility of the issuing bank
There is a list of actions performed by the issuing bank in connection with the issue of payment or credit cards by it. Here are the main ones:
The bank issues cards and issues them to users. It should be borne in mind that the bank card remains in the ownership of the financial institution. This also applies to debit cards, which serve as their holders a kind of wallet of non-cash funds. This also applies to credit cards that hold loaned money. As soon as a contract for such an issue is concluded with a client, a special account is opened immediately.
The essence of all operations is that the issuing bank first receives a request from the terminals where the card is inserted. Then, thanks to special electronic equipment, the card holder is identified.
Further options are possible. If the user asks for the balance of the account, then everything is simple: there is an instant check of the availability of money in the account, after which the information is sent back. If the request comes from the terminal from which the user intends to pay for goods, services or withdraw cash, then the bank will leave the encoded permission to pay or withdraw. Naturally, money will be immediately debited from the account with all commissions.
The institution prepares and, at the request of the client, sends a transcript of operations on the account. In addition, if the card is credit, the borrower will be issued current debt. You can get such information through the already mentioned terminals, or you can through a computer or even mobile communications. True, for the implementation of the last two options will need to conclude a contract.
The issuing bank ensures card security at an affordable level. He explains all the precautions, provides information only on a special password, blocks the accounts of stolen or lost cards. If the PIN code has become available to unauthorized persons after receiving the card in your hands, the bank is not responsible for the consequences.
Finally, a financial institution keeps records of all operations on accounts, analyzes them and reports to the Central Bank. In addition, the bank is constantly exchanging information with its colleagues.
Of course, in addition to the listed functions, there may be additions, but we still called the main ones.