What are the functions of the issuer's bank when issuing payment cards

Recent years are characterized by the explosive spread of bank cards. Credit and debit, they are issued in huge quantities. But who is the initiator of the production of this payment instrument, to whom does it bring the greatest benefit? It turns out that there is such an institution. This is the issuing bank.

Or rather, the banks that are dispersed throughout the country. Their primary task is to provide financial services to citizens and organizations. At some point in the life of citizens began to enter plastic cards, through which you can pay for goods or services with complete lack of cash. Naturally, by such a tempting prospect financial organizations could not pass and began to develop the issue of a new payment instrument.

What is this - the issuing bank?

The issuing bank is a credit institution issuing, as well as servicing plastic payment cards. It should be noted that this term "issuer" used to refer (first of all) to the sphere of using 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 legislators have established norms on regulation of this direction. Now everything is legally regulated. The main task of the bank now is to provide guarantees of fulfillment of financial obligations that arise with holders when using cards.

What is the responsibility of the issuing bank

There is a list of actions carried out by the issuing bank in connection with the issue of payment or credit cards. Here are the main ones:

1. 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 applies to debit cards, which serve for their holders as a kind of purse of non-cash funds. This also applies to credit cards on which lent money is stored. As soon as a contract for such an issue is concluded with the client, a special account is opened to him immediately.

2. 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.

3. Further variants are possible. If the user requests an account balance, then everything is simple: an instant check of the presence of money on the account occurs, after which the information is sent back. If the request comes from the terminal from which the user intends to pay for the goods, the service or withdraw cash, then the coded permission for payment or withdrawal will leave the bank. Naturally, from the account of the money will be instantly written off with all commissions.

4. The institution prepares and, at the request of the client, sends a decryption of operations on the account. In addition, if the card is a credit card, the borrower will be given a current debt. You can get such information through the terminals already mentioned, or you can use a computer or even a mobile connection. However, to implement the last two options will need to conclude a contract.

5. The issuing bank ensures the security of the card at the level accessible to it. He explains all the precautions, provides information only on a special password, blocks accounts of stolen or lost cards. If the PIN code is made available to unauthorized persons after receiving the card in their hands, the bank does not answer for the consequences.

6. Finally, the financial organization keeps a record of all transactions on the accounts, analyzes them and reports to the Central Bank. In addition, the bank constantly exchanges information with its colleagues.

Of course, in addition to the listed functions, there may be additions, but the main ones we still named.