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The Tea BreakDown: what is an issuer processor?

Unsure of the difference between an issuer processor and a payment processor? Want to know what a credit card acquirer does? Our expert reveals all.

Hot beverage

The Thredd team

September 14, 2023

We challenged Jonathan Vaux, Head of Proposition and Partnerships at Thredd, to explain issuer processing in the time it takes to make a hot drink of his choosing. See how he did. 



What is an issuer processor?

An issuer processor plays a vital role in connecting and securely managing the complex online and electronic processes behind every transaction. 

Across the payments ecosystem, multiple stakeholders – from banks and fintech's, to cardholders and merchants – require a reliable infrastructure to ensure every transaction is processed instantly, accurately and securely. Issuer processors work in the background to make this possible so that billions of payments can be made and received with absolute confidence. 

Credit card transaction processes – physical or virtual – use what is called the ‘four party model’ (although the model technically has six parties). On one side of the credit card transaction is the cardholder (or customer) and issuer (typically a bank). On the other side is the merchant selling the product or service, the credit card acquirer that accepts credit card transactions on their behalf, and the payment processor, which acts as a mediator between the merchant and various financial institutions. Alternatively, to a payment processor, there are payment gateways (for example, a card reader used to take payment). In between all these parties is the payment scheme (such as Visa or MasterCard) which allows the funds to move between issuer and credit card acquirer. 

The rise of virtual cards has created opportunities for easy and secure transaction processing without the need for as many stakeholders as before. Yet issuer processors remain the key enablers of these opportunities.  

Thredd is the issuer processing partner of choice for the world’s most ambitious businesses. We’re trusted to manage billions of transactions across 44 countries by the world’s leading fintech's, digital banks, and embedded finance providers.

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