Discover Financial

Discover Financial

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Encyclopedia
Discover Financial Services is an American financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...

 company, which issues the Discover Card
Discover Card
The Discover Card is a major credit card, issued primarily in the United States. It was originally introduced by Sears in 1985, and was part of Dean Witter, and then Morgan Stanley, until 2007, when Discover Financial Services became an independent company. Novus, a major processing center, used to...

 and operates the Discover and Pulse
Pulse (interbank network)
PULSE is an interbank electronic funds transfer network in the United States. It serves more than 4,400 U.S. financial institutions and includes more than 380,000 ATMs, as well as POS terminals nationwide...

 networks
Interbank network
An interbank network, also known as an ATM consortium or ATM network, is a computer network that connects the ATMs of different banks and permits these ATMs to interact with the ATM cards of non-native banks....

. Discover Card is the third largest credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

 brand in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, when measured by cards in force, with nearly 50 million cardholders.

History


The Discover Card was originally introduced by Sears
Sears, Roebuck and Company
Sears, officially named Sears, Roebuck and Co., is an American chain of department stores which was founded by Richard Warren Sears and Alvah Curtis Roebuck in the late 19th century...

 in 1985, and was a unit of Dean Witter
Dean Witter Reynolds
Dean Witter Reynolds was an American stock brokerage and securities firm catering to retail clients. Prior to its acquisition, it was among the largest retail firms in the securities industry with over 9,000 account executives and was among the largest members of the New York Stock Exchange...

, which merged with Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....

 in 1997. In 2007, the unit was spun off
Spin out
A spin-out, also known as a spin-off or a starburst, refers to a type of corporate action where a company "splits off" sections of itself as a separate business....

 as an independent, publicly traded company. Today, Discover is headquartered in the Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...

 suburb of Riverwoods, Illinois
Riverwoods, Illinois
Riverwoods is a village in Lake County, Illinois, United States. Riverwoods was established on the banks of the Des Plaines River in 1949 by local steel magnate Edward L. Ryerson. The population was 3,843 at the 2000 census...

.

Discover acquires Diners Club


In April 2008, Discover Financial Services and Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...

 announced that Discover was purchasing the Diners Club
Diners Club
Diners Club International, founded as Diners Club, is a charge card company formed in 1950 by Frank X. McNamara, Ralph Schneider and Matty Simmons...

 network from Citi for $165 million. In May 2008, the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

 approved the transaction. The deal was completed on July 1, 2008. Discover stated that the Diners Club network, which is a major network outside North America, will be merged with the Discover Network, a major network in North America, creating an international network for Discover Network cards and Diners Club cards. Diners Club cards will continue to be issued by Diners Club International licensees, including Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...

. Discover Bank has no plans on issuing Diners Club branded cards itself.

Competitors


In the United States, Discover, as a card brand, competes primarily with Visa, MasterCard
MasterCard
Mastercard Incorporated or MasterCard Worldwide is an American multinational financial services corporation with its headquarters in the MasterCard International Global Headquarters, Purchase, Harrison, New York, United States...

, and American Express
American Express
American Express Company or AmEx, is an American multinational financial services corporation headquartered in Three World Financial Center, Manhattan, New York City, New York, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial Average. The company is best...

. Unlike Visa and MasterCard, Discover directly issues its cards, through its Discover Bank unit. Discover is the fourth largest credit card issuer, when measured by card balances, behind Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...

, JPMorgan Chase, and Citi
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...

, and ahead of Capital One
Capital One
Capital One Financial Corp. is a U.S.-based bank holding company specializing in credit cards, home loans, auto loans, banking and savings products...

 and American Express.

Business


In addition to its card products, Discover also markets savings products
Saving (money)
Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs...

, home loans
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...

, and student loans
Student loans in the United States
While included in the term "financial aid," higher education loans differ from scholarships and grants in that they must be paid back. They come in several varieties in the United States:...

. The company also began offering a Discover Debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...

product directly to banks in 2006, through its Pulse interbank network, which Discover acquired in 2004.

External links