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This article is about now defunct financial services company. For the credit card brand, see Discover Card.

Discover Financial Services, Inc. was an American financial services company best known for its Discover Card. Founded in 1985, the company offered a wide range of banking and payment services, including personal loans, home equity loans, savings products, transaction accounts, personal loans, student loans, identity protection, home equity loans, and credit cards. It owned and operated the Discover network and Pulse, and owned Diners Club International. Discover Card is the third largest credit card brand in the United States, when measured by cards in force, with nearly 50 million cardholders.[2][3]

Discover was acquired by Capital One on May 18, 2025.

History

In 1981, Sears, Roebuck and Company purchased the Dean Witter Reynolds brokerage firm and Coldwell Banker real estate franchise[4] as an attempt to add financial services to its portfolio of customer services. In 1985, Sears also acquired the Greenwood Trust Company. These companies operated under a Sears subsidiary called Dean Witter Financial Services Group, Inc. The plan to create a one-stop financial-services center in Sears stores was not as successful as Sears had hoped. Its 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.[5]

In March 1993, Sears completed the corporate spin-off of its financial services branch as a new independent publicly traded company called Dean Witter, Discover & Co. with Dean Witter Reynolds in charge.[6]

In 1995, Discover Card Services, Inc. changed its name to NOVUS Services, Inc. to distinguish its network functions from the Discover Card.

In 1997, this company merged with Morgan Stanley to become Morgan Stanley Dean Witter, Discover & Co.

In February 1999, the company rebranded itself “Discover Financial Services, Inc.” The NOVUS logo was retired, replaced by the Discover Network logo.

In June 2007, Morgan Stanley completed the corporate spin-off of Discover.[7]

In February 2024, Capital One agreed to acquire Discover Financial in an all-stock deal worth $35.3 billion, making it the largest credit card issuer in the U.S.[8][9][10] The deal was approved by U.S. banking regulators in April 2025 after an investigation by the Attorney General of New York and a proposed consumer class action lawsuit by customers on anti-trust concerns.[11] The acquisition was completed in May 2025.[12][11][13][14]

Acquisitions

1936 postcard of the Greenwood Trust Company

The Greenwood Trust Company was founded on August 30, 1911, and was based in Greenwood, Delaware. It was acquired in 1985 and renamed Discover Bank on August 1, 2000.[15] Discover Bank is mainly an online financial institution that offers many financial services such as checking accounts, savings accounts, and money market accounts. However the first and original location of the Greenwood Trust Company on 502 East Market Street is still operating and is the only physical banking location of Discover Bank. Discover Bank was a subsidiary of Discover Financial Services and was FDIC insured.[16]

In 2008, Discover Financial Services acquired Pulse, an interbank electronic funds transfer payments network. This allowed Pulse and its more than 4,000 member banks, credit unions, and savings institutions to join with the Discover Network’s four million merchant and cash access locations. Additionally DFS now had the ability to market and issue debit and ATM cards. In February 2006, DFS announced that it would begin offering Discover debit cards to other financial institutions, becoming the first credit card services company to compete directly with MasterCard and Visa in the debit market.

Diners Club Arena in the Canton of St. Gallen, Switzerland was sponsored by Diners Club International from 2005 to 2016

In April 2008, Discover Financial announced the purchase of Diners Club International network from Citigroup for $165 million. In May 2008, the Federal Trade Commission approved the transaction and it was finalized in July 2008.[17] Discover stated that the Diners Club network, which is a major network outside the United States, will be merged with the Discover Network, a major network in the United States. The creation of an international network for Discover and Diners Club cardholders allowed customers to expand their global reach. Diners Club cards will continue to be issued by Diners Club International licensees. At this time, Discover Bank has no plans on issuing Diners Club branded cards itself.

In September 2010, Discover Financial Services announced it would acquire Citigroup-owned Student Loan Corporation.[18] The deal was finalized in December 2010, renamed Discover Student Loans, and expanded DFS’s market presence and origination capabilities in private student loans.[19] In 2014, DFS launched Rewards for Good Grades, rewarding college and graduate students who get at least a 3.0 GPA (or equivalent) a one-time cash reward equal to 1% of the loan amount on each new Discover student loan. In 2015, DFS introduced an interactive tool called FAFSA Assistant to help students and their families get ready to complete the FAFSA. The tool provides individualized tips and guidance based on personal situations.

In June 2012, LendingTree completed the sale of substantially all of the operating assets of its Home Loan Center business to a wholly owned subsidiary of Discover Financial for $45.9 million, including payments made prior to the closing which were applied to the closing price.[20] In June 2012, Discover began originating mortgages with its launch of Discover Home Loans, offering prime variable- and fixed-rate conventional and FHA home mortgage loans. In 2013, Discover’s Home Loans business started offering home equity loans.[21] As of 2023, the only home loans Discover originates are home equity loans and mortgage refinances.

Milestones and other history

In 1989, Discover Network signed its one-millionth merchant, Vincente’s Restaurant, in Wilmington, Delaware.[22]

In 1995, the discovercard.com website was launched.[22]

In December 1998, the company introduced Discover Platinum, a premium card featuring new ways to increase rewards, low balance transfer and annual percentage rates, no annual fee, and expanded credit lines.[22]

In 2002, Discover launched the industry’s first keychain credit card. It was named the Discover 2GO card and was recognized as one of the “Best Products of 2002” by editors and reporters from Business Week and USA Today.[22]

In March 2002, the company announced that the Account Center at Discovercard.com had registered over eight million card members, an increase of 61% since January 2001.

In September 2002, Citibank began accepting the Discover Card for cash advances at its approximately 450 Financial Centers and more than 2,000 ATM locations nationwide.

In October 2004, the Supreme Court 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 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.[23] 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.[24]

HSBC 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 2006, Discover Network united with Visa, MasterCard, American Express, and JCB to form the Payment Card Industry (PCI) Security Standards Council, which helps to manage account security throughout the transaction process. Also in 2006, DFS also launched the Discover Business Card, offering a single payment solution for small business owners. In July 2006, DFS and First Data Corp. announced that First Data would offer Discover Network card services to small- and mid-sized merchants.

In March 2007, Discover Financial Services announced the Discover Motiva card, a card that offers cash rewards for making six on-time monthly payments in a row. The card was the industry’s first credit card to give cash rewards for good credit management. Later in the year, DFS announced the Discover More card to replace the Discover Platinum card. The Discover More card was designed for consumers who use credit in many different categories and provided them with more ways to earn cash back on their purchases.

Following the 2008 financial crisis, Discover received about $1.2 billion in bailout funds under the Troubled Asset Relief Program (TARP). In 2010, the company repaid the funds.[25]

In 2009, Discover Financial Services introduced the Spend Analyzer tool, an online tool that provides cardmembers with a visual representation of their Discover card purchases for the past 24 months.[22]

In 2010, Discover Financial Services and Softcard announced a strategic partnership to build a mobile payment network that utilizes mobile phones to make point-of-sale purchases.

In September 2012, Discover Financial Services 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.[26]

In 2012, Discover Financial Services announced a five year, $10 million commitment called Pathway to Financial Success to help bring financial education curriculum to public high schools in the US.

In 2013, Discover Financial Services and PayPal partnered to enable merchants to accept PayPal through their existing relationship with Discover. The same year, Discover Cashback Checking was introduced. The checking account product paid customers ten cents for every debit card purchase, online bill payment, and check written. Additionally, the Discover it card was announced. The card rewards cardmembers with 5% cash back in rotating categories each quarter, such as at gas stations or restaurants. Discover also introduced Discover Home Equity Loans. Discover also became the first major credit card issuer to provide free access to FICO Credit Scores based on TransUnion data directly to its cardmembers on their monthly statements. Additional information provided with their FICO Credit Scores were educational content to help them better understand their scores.

In 2014, Discover Financial Services launched Discover it Chrome for Students, allowing students to establish credit while earning 2% at gas stations and restaurants.

In 2015, Discover Financial Services launched Discover it Miles, which rewards 1.5 miles per dollar spent.

In 2016, Discover Financial Services launched Discover it Secured for consumers looking to build their credit. Additionally, DFS expanded FICO Credit Scores based on TransUnion data for free to everyone via a platform called Credit Scorecard, which also included a summary of the data that helps determine an individual’s FICO Credit Score.

In 2017, Discover Financial Services launched a free service called Discover Identity Alerts to notify cardmembers if their social security numbers are found on risky websites and if any new accounts are opened on their Experian credit report.[22]

DFS introduced First Fee Forgiveness, a new program that automatically waives the first eligible fee each calendar year for certain Discover accounts. Eligible fees included insufficient funds, stop payment, excessive withdrawal and Money Market minimum balance fees. For its US-based employees, DFS launched the Discover College Commitment, offering employees a full ride bachelor’s degree program covering tuition, required fees, books, and supplies for select online degree programs.

In 2019, Discover Financial Services’ subsidiary Discover Bank eliminated most fees on its deposit products. Additionally, Discover Home Equity Loans surpassed $1 billion in funded loans. DFS also launched contactless cards this year.[27]

In 2021, Discover Bank originated 14,148 mortgages worth $1.3 billion.[28]

Discover Global Network

Further information: Card reciprocal agreements

Discover Financial Services had three payment systems that constituted its Discover Global Network: Discover Card, Diners Club International, and Pulse. Since 2005, to increase acceptance of its payment cards, Discover formed several agreements with other payment networks internationally.

Major credit and debit partners included:

Major debit partners included:

  • AFS in the Middle East and North Africa region
  • Areeba in Lebanon
  • ATH in Puerto Rico
  • Bcard in Bulgaria
  • Cabal in Argentina, Uruguay, Paraguay, and Brazil
  • Dutch-Bangla Bank in Bangladesh
  • Eazy in Bahrain
  • Interac in Canada
  • Jonet in Jordan
  • NAPAS in Vietnam
  • NCCC in Taiwan
  • PayNet in Malaysia
  • Prosa in Mexico
  • Saudi Payments in Saudi Arabia
  • SIBS with 10 countries in Europe and Africa

Advertising

Discover advertisement on One Times Square in 2006

From 1998 to 2007, Discover Card owned a billboard at One Times Square, just above the flagpole where the Times Square Ball is placed, until Toshiba bought the space. As a result, its logo could be seen on national television during New Year’s Eve, while the ball dropped. Discover also sponsored the ball drop itself.[30][31]

From its opening in 2001 to 2012, Sugarloaf Mills Mall in Lawrenceville, Georgia, was named Discover Mills in a 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 to interested companies.[32][33]

Discover advertisement on dasherboards at a 2014 NHL Stadium Series game at Soldier Field, Chicago

Beginning in 2008, Discover was the official credit-card partner of the National Hockey League. 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 2011 and 2012, Discover participated in and won the Grand Marshal award for excellence in creative concept and design in the Tournament of Roses Parade in Pasadena.

From 2011 to 2013, Discover was the sponsor of the college football Orange Bowl.

In 2013, Discover was the sponsor of the BCS National Championship.

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.

References

  1. ^ “Annual Report 2023 (SEC Form 10-K)”. United States Securities and Exchange Commission. February 23, 2024.
  2. ^ Thangavelu, Poonkulali. “Credit Card Market Share Statistics”. Bankrate. Retrieved November 21, 2023.
  3. ^ Khunt, Hitesh. “Top 10 U.S. Credit Card Companies by Purchase Volume”. MyCreditCardLab.com. Retrieved March 16, 2024.
  4. ^ “A Brief Chronology of Sears History”. Sears Brands, LLC. Retrieved August 12, 2009.
  5. ^ Barmash, Isadore (April 22, 1987). “Sears Net Rises 47.4% in Quarter”. The New York Times.
  6. ^ “Sears completes spinoff of its Dean Witter, Discover & Co. stake”. United Press International. June 30, 1993.
  7. ^ “Morgan Stanley Announces Record and Distribution Dates for Spin-off of Discover” (Press release). Morgan Stanley. June 1, 2007.
  8. ^ Kim, Hakyung; Wang, Christine (February 19, 2024). “Capital One to acquire Discover Financial Services in $35.3 billion all-stock deal”. CNBC.
  9. ^ 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.
  10. ^ Son, Hugh (February 26, 2024). “Jamie Dimon on Capital One’s $35.3 billion Discover acquisition: ‘Let them compete’“. CNBC.
  11. ^ a b Scarcella, Mike (July 23, 2024). “Capital One customers sue to block $35 billion Discover merger”. Reuters.
  12. ^ Stempel, Jonathan (October 28, 2024). Chang, Richard; Porter, Mark (eds.). “New York probing legality of Capital One-Discover merger”. Reuters.
  13. ^ Prentice, Chris; Azhar, Saeed (April 18, 2025). Nguyen, Lananh; Paul, Franklin; Lewis, Matthew (eds.). “Capital One, Discover deal approved by US bank regulators”. Reuters.
  14. ^ “Capital One Completes Acquisition of Discover” (Press release). Business Wire. May 18, 2025.
  15. ^ “Greenwood Trust Company Renamed Discover Bank” (Press release). Discover Financial Services. August 1, 2000.
  16. ^ “Discover Bank Locations”.
  17. ^ Miller, James P. (July 1, 2008). “Discover completes purchase of Diners Club”. Chicago Tribune. Archived from the original on July 6, 2008. Retrieved July 1, 2008.
  18. ^ “Discover Financial buying Citigroup’s Student Loan Corp”. Crain’s Chicago Business. Associated Press. September 17, 2010.
  19. ^ Shoai, Zaeem (January 10, 2011). “Discover closes acquisition of Student Loan Corp” – via ProQuest.
  20. ^ “Tree.com Completes Sale of Certain Assets of Home Loan Center, Inc. to Discover” (Press release). LendingTree. June 7, 2012.
  21. ^ “Discover Debuts Home Equity Loans” (Press release).
  22. ^ a b c d e f “Welcome to Discover”. Discover Card.
  23. ^ Kingson, Jennifer A. (March 26, 2005). “Credit Card Issuers Adjust to Open Field”. The New York Times. ISSN 0362-4331.
  24. ^ “Wal-Mart taps MasterCard for store-branded credit card”. Saint Louis Post-Dispatch. April 5, 2014.
  25. ^ “Discover Lifts The TARP”. Forbes. March 17, 2010.
  26. ^ “Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing” (Press release). Consumer Financial Protection Bureau. September 24, 2012.
  27. ^ “Discover – Our Company | Discover Card”.
  28. ^ “Discover Bank Mortgage Rates, Fees & Info”. OriginationData.com.
  29. ^ “Card Acceptance – Troy – Turkey’s Payment Method”.
  30. ^ Metro Business; Discover Is Sponsor For Year 2000 Event
  31. ^ Back in Times Square, Toshiba Stands Tall
  32. ^ Daniels, Linda (March 6, 2000). “Discover Mills clears series of firsts for malls”. American City Business Journals.
  33. ^ Evans, Vanzetta (September 22, 2012). “Discover Mills to be Renamed Sugarloaf Mills”. Patch Media.
    • Historical business data for Discover Financial Services, Inc.:
    • SEC filings