Banking Conundrum
February 5, 2004 7:54 PM   Subscribe

Is it possible that a financial institution whose name is on a credit or debit card is not the same institution that a merchant would see as the issuing institution? [More inside]

I do my banking with a credit union at my place of employment, and have a Visa Check Card from them. I've used it hundreds of times, both in person and online, without a problem.

Yesterday I used it to order a computer online. (I have far more than enough in my account to cover it, and it's also well below the credit union's stated maximum for check card purchases.) Today, I got a message from the merchant. He said he had tried to verify my address with the bank, and they had refused, saying it was against their policy. The strange part is, he named the bank he had called--which was one I hadn't heard of before, and I'm not aware of any connection between my credit union and this bank.

So, is it possible that my credit union works behind the scenes with this bank in handling check cards, in such a way that this bank appears to a merchant to be the card issuer, even though the cardholder is unaware of any association with the bank? Or was this just a mistake somewhere along the line? (Yes, I'll contact my credit union and the merchant tomorrow, but I'd like to gain some knowledge before then so I don't appear completely clueless.)

When a merchant has just a credit card number, how do they find out who the issuer is? Is there some way someone who's not a merchant (me) can check out what the merchant learns when he submits (online? by phone? other method?) my card number? Is it common for a merchant to ask to verify a customer's address with the card issuer for large purchases? (This seems reasonable to me.) Is it common for the issuer to refuse to verify an address? (The merchant's message said he had never had a bank refuse this before.)

Gee, all the things you never think about when the transaction goes smoothly...
posted by DevilsAdvocate to Work & Money (8 answers total)
The issuer is almost certainly the institution named on the card, or a parent institution. I suspect the merchant or the merchant's credit card processor simply made a mistake.
posted by majick at 8:00 PM on February 5, 2004

I'm an online merchant. I verify all my orders through the automated AVS address verification system (even small orders). This is normal. I don't have to call anyone, unless I have to call in the whole order (such as if my usual card verification mechanism was broken, but that's pretty darned rare).

However, if there are reasons to call about the address (for example, sometimes AVS is down and I might have to call it in), I never call the bank. I don't know who the bank is, I just have the number. I call Visa or MasterCard's merchant services number and speak to them. I've rarely had to do that, but for a computer order I imagine merchants are extra careful.

Visa/MC probably have to go through the bank to get the address info, so maybe that's where the hang-up occurred.
posted by litlnemo at 8:44 PM on February 5, 2004

I have a credit card issued by Suntrust Bank, but I make payments to a company called MBNA, and when I download the transactions of my checking account, it shows up as MBNA.
posted by crunchland at 11:01 PM on February 5, 2004

I use a credit union, and at least until recently some of the stuff went through a different bank -- and that was just checks. They had the usual routing number in the lower left hand part of the check, and in small letters in another place they said "PAYABLE THROUGH FOOBAR BANK ACH ROUTING NUMBER 123456789"
posted by ROU_Xenophobe at 11:27 PM on February 5, 2004

The first six digits of your credit card indicate what institution is handling your credit card. As long as the merchant has access to the appropriate database (often part of the package deal for third party authorization services), they can look it up.

And yes, it's not wildly unusual for the card and the database not to match -- especially when the card is from Obscure Bank and the institution is Massive Behemoth.
posted by gnomeloaf at 6:39 AM on February 6, 2004

to add to what others have said: on credit union check cards, the billing address may be the BANK, not the Cardholder. this happened to me when i used my checkcard a lot, i got the bank to add my address in my "other information" box or something like that and never had another problem.
posted by yeahyeahyeahwhoo at 6:42 AM on February 6, 2004

As mentioned above, MBNA in Delaware with its bank-friendly laws is the issuing institution for cards from many banks, including mine. And I don't even bank at Obscure Bank, but Massive Behemoth, aka Wachovia.
posted by TedW at 8:20 AM on February 6, 2004

Response by poster: Thanks, everyone, for the education. In this case, it turned out it was just a mistake after all. Called the CU and they said, no, they do their own check card issuing and aren't involved with any other bank. Relayed this to the merchant, who was able to verify the address with my CU, and everything is peachy keen.

Fascinating stuff nonetheless--thanks again.
posted by DevilsAdvocate at 4:10 PM on February 6, 2004

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