Issuing Bank
An issuing bank (or issuer) is the financial institution that issues payment cards to consumers and businesses, receives interchange on card transactions, and manages the cardholder relationship.
In the card payment flow, the issuing bank is the cardholder's bank — the institution that issued the card. When a transaction is authorized, the issuing bank approves or declines based on available credit or balance, and later receives interchange from the acquiring bank as compensation for the credit risk and transaction processing.
For embedded finance, being on the issuing side — rather than the acquiring side — is the key to capturing interchange revenue. BaaS programs and direct bank programs that issue debit or credit cards to customers are positioned as issuers. Programs that only process inbound card payments from customers are on the acquiring side and pay interchange rather than receive it.
The issuing bank relationship is what makes card issuing programs work — the platform issues cards under the sponsor bank's BIN, the bank is the technical issuer, and interchange flows back to the bank and then to the platform per the revenue share agreement.