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Issuing Bank Meaning

The financial institution that provides the customer with their credit or debit card. In the payment ecosystem, the issuing bank is responsible for authorizing transactions (checking if the user has enough money) and is the party that actually pays the merchant's bank during the settlement process.

The issuing bank also takes on the primary "credit risk." If a customer buys something on a credit card but doesn't pay their bill, the issuing bank is the one that loses money. They also handle "chargebacks" if a customer disputes a transaction, acting as the judge between the consumer and the merchant.

In the "neo-bank" world, many fintech companies act as the "interface" but use a traditional "issuing bank" in the background to handle the actual money and regulatory compliance.

The issuing bank's logo is usually found on the back of the card, even if the front says "Apple" or "Venmo."

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