Discover is a

credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...

brand issued primarily in the United States. It was introduced by

Sears Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began a ...

in 1985. When launched, Discover did not charge an annual fee and offered a higher-than-normal credit limit, features that were disruptive to the existing credit card industry. A subsequent innovation was "Cashback Bonus" on purchases. Most cards with the Discover brand are issued by Discover Bank, formerly the Greenwood Trust Company. Discover transactions are processed through the Discover Network payment network. In 2005, Discover Financial Services acquired

Pulse In medicine, a pulse represents the tactile arterial palpation of the cardiac cycle (heartbeat) by trained fingertips. The pulse may be palpated in any place that allows an artery to be compressed near the surface of the body, such as at the nec ...

, an

electronic funds transfer Electronic funds transfer (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of b ...

network, allowing it to market and issue debit and ATM cards. In February 2006, Discover Financial Services announced that it would begin offering Discover

debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...

s to other financial institutions, made possible by the acquisition of Pulse. Discover is the third largest credit card brand in the U.S. based on the number of cards in circulation, behind

Visa Visa most commonly refers to: *Visa Inc., a US multinational financial and payment cards company ** Visa Debit card issued by the above company ** Visa Electron, a debit card ** Visa Plus, an interbank network *Travel visa, a document that allows ...

and Mastercard, with 57 million cardholders.

History

At the time Discover was introduced, Sears was the largest retailer in the United States. It had purchased the

Dean Witter Reynolds Dean Witter Reynolds was an American stock brokerage and securities firm catering to a variety of clients. Prior to the company's acquisition, it was among the largest firms in the securities industry with over 9,000 account executives (ranking ...

brokerage organization and Coldwell, Banker & Company (real estate) in 1981 as an attempt to add financial services to its portfolio of customer services. Ray Kennedy, Sr, father of

country A country is a distinct part of the world, such as a state, nation, or other political entity. It may be a sovereign state or make up one part of a larger state. For example, the country of Japan is an independent, sovereign state, while the ...

singer

Ray Kennedy Raymond Kennedy (28 July 1951 – 30 November 2021) was an English footballer who won every domestic honour in the game with Arsenal and Liverpool in the 1970s and early 1980s. Kennedy played as a forward for Arsenal, and then played as a le ...

and the

credit manager Credit management is the process of granting credit, setting the terms on which it is granted, recovering this credit when it is due, and ensuring compliance with company credit policy, among other credit related functions. The goal within a bank ...

for Sears, conceived the card.Whitburn, Joel (1996). ''The Billboard Book of Top 40 Country Hits'', p.173. . After a trial period in 1985, starting with a $26.77 purchase at an Atlanta Sears on September 17, the actual launch was pushed through by

Philip J. Purcell Philip J. Purcell (born 1943) is an American businessman. Purcell is a former chairman and CEO of Morgan Stanley, where he worked in the late 1990s and 2000s. He was previously chairman and CEO of Dean Witter, Discover and managed the firm unde ...

and Mitchell M. Merin, the company's senior vice president for corporate administration and manager of financial analysis, respectively. 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 The Willis Tower (originally the Sears Tower) is a 108- story, skyscraper in the Loop community area of Chicago in Illinois, United States. Designed by architect Bruce Graham and engineer Fazlur Rahman Khan of Skidmore, Owings & Merrill (SOM ...

, then the company's headquarters. Discover was part of

Dean Witter Dean Witter Reynolds was an American stock brokerage and securities firm catering to a variety of clients. Prior to the company's acquisition, it was among the largest firms in the securities industry with over 9,000 account executives (ranking t ...

, and then

Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...

, until 2007, when

Discover Financial Discover Financial Services is an American financial services company that owns and operates Discover Bank, which offers checking and savings accounts, personal loans, home equity loans, student loans and credit cards. It also owns and operates ...

Services became an independent company. Novus was once the major processing center that partnered with the company. The Novus logo was retired, replaced by the Discover Network logo. Olddiscover

Unlike other attempts at creating a credit card to rival MasterCard and

, such as

Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...

'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. Discover was also noteworthy for being the only credit card accepted by the

U.S. Customs Service The United States Customs Service was the very first federal law enforcement agency of the Federal government of the United States, U.S. federal government. Established on July 31, 1789, it collected import tariffs, performed other selected borde ...

to pay

customs duty A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and polic ...

, effective February 19, 1987. 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 Sam's West, Inc. (doing business as Sam's Club) is an American chain of membership-only retail warehouse clubs owned and operated by Walmart Inc., founded in 1983 and named after Walmart founder Sam Walton as Sam’s Wholesale Club. , Sam's Cl ...

; 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. In this same year, Discover also signed a restaurant in Delaware as its 1 millionth merchant in its payment network. 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 Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...

and from so-called category killers such as

Toys "R" Us Toys "R" Us is an American toy, clothing, and baby product retailer owned by Tru Kids (doing business as Tru Kids Brands) and various others. The company was founded in 1957; its first store was built in April 1948, with its headquarters loc ...

. 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. Sears sold its financial businesses in 1993 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.

Discover Bank

The Greenwood Trust Company was founded in 1911 and is based in

Greenwood, Delaware Greenwood is a town in Sussex County, Delaware, United States. The population was 973 at the 2010 census, an increase of 16.2% over the previous decade. It is part of the Salisbury, Maryland-Delaware Metropolitan Statistical Area. History The ...

. It was acquired by Discover Financial Services in 1985 and renamed Discover Bank in 2000. The first and original location of Greenwood Trust Co. on East Market Street is now the town hall and police station.

Global alliance

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. Some major examples include: *

Diners Club International Diners Club International (DCI), founded as Diners Club, is a charge card company owned by Discover Financial Services. Formed in 1950 by Frank X. McNamara, Ralph Schneider, Matty Simmons, and Alfred S. Bloomingdale, it was the first independe ...

worldwide *

BC Card BC Card (Hangul: 비씨카드) is a South Korean financial services company headquartered in Seoul. South Korea's largest payment processing company, it provides end-to-end payment services, primarily to financial institutions, as well as to loca ...

in South Korea * JCB in Japan *

RuPay RuPay ''(portmanteau of Rupee and Payment)'' is an Indian multinational financial services and payment service system, conceived and launched by the National Payments Corporation of India (NPCI) on 26 March 2012. It was created to fulfil th ...

in India *

TROY Troy ( el, Τροία and Latin: Troia, Hittite language, Hittite: 𒋫𒊒𒄿𒊭 ''Truwiša'') or Ilion ( el, Ίλιον and Latin: Ilium, Hittite language, Hittite: 𒃾𒇻𒊭 ''Wiluša'') was an ancient city located at Hisarlik in prese ...

in Turkey *

UnionPay UnionPay (), also known as China UnionPay () or by its abbreviation, CUP or UPI internationally, is a Chinese state-owned financial services corporation headquartered in Shanghai, China. It provides bank card services and a major card sch ...

in China *

Verve Verve may refer to: Music * The Verve, an English rock band * ''The Verve E.P.'', a 1992 EP by The Verve * ''Verve'' (R. Stevie Moore album) * Verve Records, an American jazz record label Businesses * Verve Coffee Roasters, an American coffee ho ...

in Nigeria * DinaCard in Serbia * Elo in Brazil * ATH in Puerto Rico * Mercury throughout the Middle East * NAPAS in Vietnam * Prosa in Mexico Currently, Discover is accepted in 185 countries.

Business developments

In October 2004, the

Supreme Court of the United States The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

chose not to review a ruling in Discover's favor that challenged exclusionary policies of Visa and MasterCard, stating that MasterCard and Visa were violating antitrust regulations. Before this ruling, Visa and MasterCard would not allow banks to issue a Discover or American Express card if they issued a Visa or MasterCard. Within days of the court ruling, Discover filed a lawsuit in federal court seeking damages from Visa and MasterCard. Shortly after the 2004 Supreme Court ruling, Discover struck its first deal to have its cards issued by another financial institution,

GE Consumer Finance GE Capital is the financial services division of General Electric. The company currently only runs one division, GE Energy Financial Services. It had provided additional services in the past; however, those units were sold between 2013 and 201 ...

, which began to issue credit cards for retailer

and its wholesale warehouse stores,

. 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 announced that they were ending their relationship with Discover and would begin converting all Discover-branded cards to Mastercard beginning in June 2014.

HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tri ...

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.

Advertising

From 1998 to 2007, Discover Card owned a billboard at

One Times Square One Times Square (also known as 1475 Broadway, the New York Times Building, the New York Times Tower, or simply as the Times Tower) is a 25-story, skyscraper on Times Square in the Midtown Manhattan neighborhood of New York City. Designed by ...

, just above the flagpole where the

Times Square Ball The Times Square Ball is a time ball located in New York City's Times Square. Located on the roof of One Times Square, the ball is a prominent part of a New Year's Eve celebration in Times Square commonly referred to as the ball drop, where the ...

is placed, until

Toshiba , commonly known as Toshiba and stylized as TOSHIBA, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. Its diversified products and services include power, industrial and social infrastructure system ...

bought the space. As a result, its logo could be seen on national television during

New Year's Eve In the Gregorian calendar, New Year's Eve, also known as Old Year's Day or Saint Sylvester's Day in many countries, is the evening or the entire day of the last day of the year, on 31 December. The last day of the year is commonly referred to ...

, while the ball dropped. Discover also sponsored the ball drop itself. From its opening in 2001 to 2012,

Sugarloaf Mills Sugarloaf Mills, formerly Discover Mills, is a single story shopping mall in exurban Atlanta, located in Gwinnett County, Georgia, near the interchange of Interstate 85 and Highway 316. Opened in 2001, the mall features 13 anchors, over 150 spec ...

Mall in

Lawrenceville, Georgia Lawrenceville is a city in and the county seat of Gwinnett County, Georgia, United States. It is a suburb of Atlanta, located approximately northeast of downtown. As of the 2020 census, the population of Lawrenceville was 30,629. In 2019, the ...

, was named Discover Mills in a

naming rights Naming rights are a financial transaction and form of advertising or memorialization whereby a corporation, person, or other entity purchases the right to name a facility, object, location, program, or event, typically for a defined period of t ...

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 to interested companies. Since 2008, Discover has been the official credit-card partner of the

National Hockey League The National Hockey League (NHL; french: Ligue nationale de hockey—LNH, ) is a professional ice hockey league in North America comprising 32 teams—25 in the United States and 7 in Canada. It is considered to be the top ranked professional ...

. As part of this deal, Discover offers team- and league-branded credit cards as well as a 10% discount on purchases made from the NHL's online store using Discover. In July 2020, Back in the Day Bakery, run by chef

Cheryl Day Cheryl Day (born 1961) is a baker and author, who is owner of Back in the Day Bakery and co-founder of Southern Restaurants for Racial Justice. She is the author of two best-selling cookbooks, written with her husband Griff Day. In 2015 she was ...

, was a recipient of a $25,000 prize donated by Discover Card, to support black-owned businesses affected by the COVID-19 pandemic.

References

External links

* * {{Sears Holdings Credit cards in the United States Sears Holdings brands Products introduced in 1985 Discover Financial