Discover Card

Discover Card is one a small group of a major credit cards that is largely issued in the United States. The credit card was initially introduced to the public by The Sears, Roebuck and Company in the mid-1980′s. Discover Card credit card services was originally part of the Dean Whitter and Morgan Stanley stock brokerage companies until just after the millennium. In 2007, Discover Financial Services became an independent company.

Most credit cards with the Discover brand are issued directly by Discover Bank and Discover Card credit card transactions are processed through the Discover Network payment network. In recent years, Discover began issuing Discover Debit cards to various major U.S. banks, made possible by the Pulse payment system, which Discover acquired in late 2005.

Today, in 2008, there are over 50 million Discover Card card members while the Discover Network retains more than 4 million merchant and cash access locations in North America. The Pulse brand automatic teller machine network – or ATM – currently serves more than 4,500 banks, credit unions and savings account financial institutions. Although it can be used to obtain cash from ATM locations worldwide, the Discover Card is primarily accepted in North America.

Owing to its heritage at Sears, an additional benefit of the Discover Card is the ability for customer cardholders to pay off their debt, in person, at any Sears and Roebuck retail store location.

In Canada, Discover brand credit cards and bank cards are accepted at few locations, usually through merchants who cater to American tourists, such as automotive rental agencies and hotels, as well as major American stores, like Sears and K-Mart located there. Some Canadian businesses do accept Discover cards though usually favor Visa, Mastercard and American Express credit cards. Walk-up ATM service offered by Discover is not available in Canada, however, credit card members can access cash through this method at any Canadian Sears store.

In the mid-1980′s, the Discover Card quickly gained a large national consumer base. It required no annual fee, which was not usual at the time and offered a higher credit limit than similar competitive cards. Cardholders could earn something called a “Cashback Bonus,” in which a percentage of the amount spent would be refunded to the account, depending on how much the card was used.

The original plan to create a one-stop financial services center in Sears Roebuck retail stores was not as successful as Sears had hoped, so its promotion of the Discover Card was thought both to hurt Sears turnover and to restrict the card’s usage potential. Other retailer companies resisted the Discover Card, as they believed they would be helping their competitor, Sears.

In light of additional strong competition both from such mega retailers as Wal-Mart and other stores, Sears began to face overall market difficulties in the late 1980′s. Sears then sold its financial businesses in 1993 and began to accept MasterCard and Visa once again. The Discover Card then became part of the Dean Witter financial services firm, which later merged with Morgan Stanley in 1997.

In October 2004, the United States Supreme Court upheld a ruling in Discover Card’s favor that challenged exclusionary policies of competitors Visa and MasterCard. In 2005, Discover Card acquired PULSE, allowing it to issue and market debit and ATM cards. Before this ruling, Visa and MasterCard would not allow banks to issue a Discover Card if they issued a Visa or MasterCard. Within days of the court ruling, Discover Card filed a lawsuit in A U.S. federal court seeking damages from Visa and MasterCard, which it won.

While Discover brand cards are not currently accepted in Europe, the company’s presence continues to grow in Mexico, Costa Rica, the Marshall Islands, Belize, Palau and several of the many Caribbean Island nations. Additionally, in May 2005 Discover Network announced an alliance with China UnionPay Network. The two companies signed a long-term agreement that will lead to acceptance of Discover Network brand cards at UnionPay ATMs and point-of-sale terminals in China and acceptance of China UnionPay cards on the PULSE network in the U.S. CUP cards have been accepted in the US since December 2005, and Discover Cards have been accepted in China since November 8, 2006. This partnership makes Discover Card the most widely accepted American card in China, above longstanding competitors Visa, MasterCard and American Express. As of 2006, a similar agreement has been struck in the United Kingdom, which allows over 60,000 cash machines in the UK to accept Discover and several UK financial institutions to use more than a quarter of a million cash machines in the United States. Discover also acquired the Diners Club Network in the summer of 2008, which because of its existing worldwide reach, allows Discover, in turn, to also expand its already large reach.