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Discover Card

From Wikipedia, the free encyclopedia
(Redirected from Discover Network)

Discover
TypeSubsidiary
IndustryFinancial services
GenreCredit card
Founded1985; 41 years ago (1985)
FounderSears
Headquarters
United States
Area served
United States (primary)
Increase US$3.6 billion (2016)
Increase US$2.393 billion (2016)
Parent
Websitediscover.com
Discover it credit card

Discover is a brand of credit card issued primarily in the United States as well as a related payment system. Discover is accepted in 185 countries.[1] It is notable as being one of the first cards not to charge an annual fee and to offer cash back.[2] Originally offered to the public by retailer Sears in 1986, Discover is now a subsidiary of Capital One.

Discover is the third largest credit card brand in the United States, with 60.6 million cardholders or about 8% of cards in circulation, placing it well behind Visa (48%) and Mastercard (36%), but slightly ahead of American Express (7.5%).[3][4]

History

[edit]
The original location of the Greenwood Trust Company in Greenwood, Delaware, now the Greenwood Municipal Building

At the time Discover was introduced, Sears was the largest retailer in the United States. It had purchased the Dean Witter Reynolds brokerage organization and Coldwell, Banker & Company (real estate) in 1981[5] as an attempt to add financial services to its portfolio of customer services. Ray Kennedy Sr., father of country singer Ray Kennedy and the credit manager for Sears, conceived the card.[6] After a trial period in 1985, starting with a $26.77 purchase at an Atlanta Sears on September 17,[7] the actual launch was pushed through by Philip J. Purcell and Mitchell M. Merin, the company's senior vice president for corporate administration and manager of financial analysis, respectively.[8] Together with the Discover Card (and its issuing bank, the Greenwood Trust Company, owned by Sears), this was named the Sears Financial Network. Early Discover Cards bore a small embossed symbol representing the Sears Tower, then the company's headquarters.

Discover was part of Dean Witter, and then Morgan Stanley, until 2007, when Discover Financial Services became an independent company.[9] Novus was once the major processing center that partnered with the company. The Novus logo was retired, replaced by the Discover Network logo.

Discover and Novus retired acceptance mark

Unlike other attempts at creating a credit card to rival MasterCard and Visa, such as Citibank's Choice card, Discover gained a large national consumer base. It carried no annual fee, which was uncommon at the time, and offered a typically higher credit limit than similar cards. Cardholders could also earn a "Cashback Bonus", in which a percentage of the amount spent would be refunded to the account (from 1% to 5%), depending on how much the card was used.[10] Discover was also noteworthy for being the only credit card accepted by the U.S. Customs Service to pay customs duty, effective February 19, 1987.[11] Since it did not charge a percentage fee to retailers, unlike Visa, MasterCard, and American Express, Discover was also the only credit card accepted at Sam's Club; the retailer has since started to accept MasterCard and American Express (see below). A 1989 study found that Discover had strong consumer adoption in the U.S.; the number of households with Discover cards increased by 2.1 million, or 14 percent, in 1989.[12] In this same year, Discover also signed a restaurant in Delaware as its 1 millionth merchant in its payment network.[13]

The plan to create a one-stop financial-services center in Sears stores was not as successful as Sears had hoped, and its promotion of Discover was thought both to hurt Sears turnover and to restrict the card's potential. Other retailers resisted it, as they were developing their own credit products and they believed they would be helping their competitor. Sears began to face difficulties in the late 1980s in light of these developments, and with strong competition both from Walmart and from so-called category killers such as Toys "R" Us. Discover's introduction was costly; Sears's Discover credit card operations accounted for a loss of $22 million in the fourth quarter of 1986, and a loss of $25.8 million in the first quarter of 1987.[14]

In 1993, Sears completed the corporate spin-off of its Dean Witter division into a new publicly traded company,[15] and began to accept MasterCard and Visa in addition to its store credit card and Discover. Discover became part of the Dean Witter financial services firm, and the new company was called Dean Witter, Discover & Co. In 1997, this company merged with Morgan Stanley to become Morgan Stanley Dean Witter, Discover & Co. In 1999, this company rebranded itself as Discover Financial Services, Inc.[16]

The Greenwood Trust Company was founded in 1911 and is based in Greenwood, Delaware. It was acquired by Discover Financial in 1985[17] and renamed Discover Bank in 2000.[18] The original location of the Greenwood Trust Company on East Market Street in Greenwood is now the town hall and police station.[19]

In October 2004, the Supreme Court of the United States upheld a ruling in Discover's favor that challenged exclusionary policies of Visa and MasterCard, stating that Mastercard and Visa were violating antitrust regulations with anticompetitive practices. Before this ruling, Visa and MasterCard would not allow banks to issue a Discover or American Express card if they issued a card by Visa or MasterCard. Within days of the court ruling, Discover filed a lawsuit in federal court seeking damages from Visa and MasterCard. In October 2008, DFS was awarded $2.75 billion in damages, the third largest settlement at the time in U.S. history. Shortly after the Supreme Court ruling, Discover struck its first deal to have its cards issued by another financial institution, GE Consumer Finance, which began to issue credit cards for retailer Walmart and its wholesale warehouse stores, Sam's Club.[20] Transactions were processed on the Discover Network. Sam's Club exclusively accepted Discover for many years; since November 2006, it has also accepted MasterCard for purchases. In April 2014, Walmart ended its relationship with Discover. Walmart began converting all Discover-branded cards to Mastercard beginning in June 2014.[21]

In January 2005, then-parent company Discover Financial acquired Pulse, an interbank electronic funds transfer payments network, for $311 million. The acquisition enabled the company to offer debit cards.[22][23]

HSBC has issued Discover-branded credit cards processed through the Discover Network since its acquisition of card issuer Metris in late 2005. Metris had originally signed an agreement with Discover in September 2005, three months prior to the HSBC acquisition.

In September 2012, Discover was ordered to pay over $200 million in fines and customer reimbursements to settle accusations by U.S. federal regulators that it had engaged in deceptive telemarketing tactics.[24]

In October 2025, merchants agreed to a $231.7 million settlement before a U.S. District Judge, as B & R Supermarket, Inc., et al v. Visa, Inc. et al, for costs imposed related to frauds involving counterfeit, lost, or stolen cards, with Discover agreeing[25] to pay $12.2 million of the settlement.[26]

In May 2025, Capital One acquired Discover Financial in an all-stock deal worth $35.3 billion, making it the largest credit card issuer in the U.S.[27][28][29][30][31][32]

Card reciprocal agreements

[edit]

Starting around 2005, to increase acceptance around the world, Discover has formed several agreements with other payment networks internationally. This allows Discover cardholders to perform transactions while traveling abroad. Vice versa, cardholders of other countries may utilize their cards at U.S. merchants that accept Discover.[33] Some major examples include:

Advertising and sponsorships

[edit]
Discover Card advertising (top right) on the boards of an NHL ice hockey rink during a playoff game

From 1998 to 2007, Discover Card owned a billboard at One Times Square, just above the flagpole where the Times Square Ball is placed and Discover sponsored the annual ball drop.[35][36]

From its opening in 2001 to 2012, Sugarloaf Mills Mall in Lawrenceville, Georgia, was named Discover Mills in a $10 million naming rights partnership with Discover Card. The slogan for the mall was "Where Discover Card is the Smart Choice". It was the first shopping mall to have granted naming rights.[37][38][39]

Beginning in 2010, Discover was the official credit-card partner of the National Hockey League.[40]

In 2011 and 2012, Discover Card's float won the Grand Marshal award for excellence in creative concept and design in the Rose Parade in Pasadena.[41]

From 2011 to 2013, Discover was the sponsor of the college football Orange Bowl. It was also the sponsor of the 2013 BCS National Championship Game.[42][43]

In 2017, Discover was named the first ever presenting sponsor and official credit card of the Big Ten Football Championship Game as part of a multi-year sponsorship.

In 2024, actress Jennifer Coolidge starred in Discover Card's television commercials.[44]

See also

[edit]

Companies portal

References

[edit]
  1. ↑ "Discover Network Acceptance".
  2. ↑ "When Were Credit Cards Invented?". Capital One. June 12, 2025.
  3. ↑ Thangavelu, Poonkulali. "Credit Card Market Share Statistics". Bankrate. Archived from the original on March 8, 2024. Retrieved November 21, 2023.
  4. ↑ Khunt, Hitesh. "Top 10 U.S. Credit Card Companies by Purchase Volume". MyCreditCardLab.com. Archived from the original on August 24, 2025. Retrieved March 16, 2024.
  5. ↑ "A Brief Chronology of Sears History". Sears Brands, LLC. Archived from the original on August 22, 2009. Retrieved August 12, 2009.
  6. ↑ Whitburn, Joel (1996). The Billboard Book of Top 40 Country Hits, p.173. ISBN 0-8230-7632-6.
  7. ↑ Kagan, Julia (June 27, 2018). "Discover Card". Investopedia. Archived from the original on July 29, 2020. Retrieved August 1, 2020.
  8. ↑ Blake, Rich (November 1, 2002). "Blue chipped". Institutional Investor. Archived from the original on October 3, 2022. Retrieved August 9, 2018.
  9. ↑ “Discover flying solo” Archived July 29, 2020, at the Wayback Machine. The Green Sheet, July 9, 2007. Retrieved 2016-12-04.
  10. ↑ Simon, Jeremy M. Credit card reward programs: a short history Archived July 19, 2018, at the Wayback Machine. CreditCards.com, November 14, 2006. Retrieved 2016-12-04.
  11. ↑ Customs Service Rules on Credit Cards. Journal of Commerce. Retrieved December 5, 2016.
  12. ↑ Aguilar, Linda. Banks and nonbanks at the end of the ‘80s Archived August 24, 2025, at the Wayback Machine. Federal Reserve Bank of Chicago, March 1, 1990.
  13. ↑ Harkness, Brendan. Archived January 25, 2021, at the Wayback Machine. CreditCardInsider.com, April 7, 2020.
  14. ↑ Barmash, Isadore. "Sears Net Rises 47.4% in Quarter" Archived January 29, 2021, at the Wayback Machine, The New York Times, April 22, 1987.
  15. ↑ "Sears completes spinoff of its Dean Witter, Discover & Co. stake". United Press International. June 30, 1993. Archived from the original on August 24, 2025. Retrieved February 20, 2024.
  16. ↑ Kagan, Julia. Archived July 29, 2020, at the Wayback Machine. Investopedia.com, June 27, 2018.
  17. ↑ Leib, Jeffrey A. (February 21, 1985). "Sears to Broaden Credit Card". The New York Times.
  18. ↑ "About the History of Greenwood". Delaware.
  19. ↑ "Discover Bank". Archived from the original on October 29, 2016. Retrieved January 21, 2014.
  20. ↑ Kingson, Jennifer A. (March 26, 2005). "Credit Card Issuers Adjust to Open Field". The New York Times. ISSN 0362-4331.
  21. ↑ "Wal-Mart taps MasterCard for store-branded credit card". St. Louis Post-Dispatch. April 5, 2014.
  22. ↑ "Discover Financial Services Breaks into Signature Debit Market with Introduction of Discover Debit". Inside ARM. September 12, 2006.
  23. ↑ "About Us". Morgan Stanley.
  24. ↑ "Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing". Consumer Financial Protection Bureau. September 24, 2012. Archived from the original on April 10, 2016. Retrieved July 3, 2014.
  25. ↑ Scarcella, Mike "settlement in merchants' class action" Reuters, October 13, 2025. Retrieved December 13, 2025.
  26. ↑ Pape, Carter "Visa, Mastercard settle merchant suit for nearly $200M" American Banker, October 16, 2025. Retrieved December 13, 2025.
  27. ↑ Kim, Hakyung; Wang, Christine (February 19, 2024). "Capital One to acquire Discover Financial Services in $35.3 billion all-stock deal". CNBC.
  28. ↑ Nerkar, Santul; Flitter, Emily (February 20, 2024). "What to Know About Capital One's Proposed Acquisition of Discover". The New York Times. ISSN 0362-4331.
  29. ↑ Son, Hugh (February 26, 2024). "Jamie Dimon on Capital One's $35.3 billion Discover acquisition: 'Let them compete'". CNBC.
  30. ↑ Stempel, Jonathan (October 28, 2024). Chang, Richard; Porter, Mark (eds.). "New York probing legality of Capital One-Discover merger". Reuters.
  31. ↑ Scarcella, Mike (July 23, 2024). "Capital One customers sue to block $35 billion Discover merger". Reuters.
  32. ↑ Prentice, Chris; Azhar, Saeed (April 18, 2025). Nguyen, Lananh; Paul, Franklin; Lewis, Matthew (eds.). "Capital One, Discover deal approved by US bank regulators". Reuters.
  33. ↑ "Reach and Acceptance | Discover Global Network". Archived from the original on April 17, 2021. Retrieved September 18, 2020.
  34. ↑ "Card Acceptance – Troy – Turkey's Payment Method". Archived from the original on March 23, 2018. Retrieved March 23, 2018.
  35. ↑ "Metro Business; Discover Is Sponsor For Year 2000 Event". The New York Times. June 18, 1998.
  36. ↑ "Back in Times Square, Toshiba Stands Tall". The New York Times. December 3, 2007.
  37. ↑ Elliott, Stuart (February 18, 2000). "THE MEDIA BUSINESS: ADVERTISING -- ADDENDA; Mall Developer Sells Naming Rights". The New York Times.
  38. ↑ Evans, Vanzetta (September 22, 2012). "Discover Mills to be Renamed Sugarloaf Mills". Patch Media.
  39. ↑ Daniels, Linda (March 6, 2000). "Discover Mills clears series of firsts for malls". American City Business Journals.
  40. ↑ Klayman, Ben (November 8, 2010). McCormick, Gerald E. (ed.). "NHL signs U.S. sponsorship deal with Discover". Reuters.
  41. ↑ "Discover Card Float Among Big Winners In 2012 Rose Parade". CBS News. January 2, 2012.
  42. ↑ "Discover to sponsor Orange Bowl". ESPN. August 26, 2010.
  43. ↑ "Discover to sponsor Orange Bowl in 4-year deal". NBC News. Associated Press. August 26, 2010.
  44. ↑ Discover Card TV Spot, 'Hat Trick' Featuring Jennifer Coolidge, Wayne Gretzky. Archived from the original on August 24, 2025. Retrieved January 14, 2025 – via www.ispot.tv.
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