Although the mobile payments venture Isis has publicly disclosed that it wants to add larger payments networks than its initial partner, Discover Financial Services, the network says it might now be better positioned in the mobile payments space.
When three U.S. wireless carriers announced Isis in November, it worked with only Discover to route payments.
But in April the carriers said they would seek partnerships with other networks, and many observers felt this put Discover at a disadvantage.
Michael P. Taiano, a credit card industry analyst at Sandler O'Neill & Partners, said that Discover's situation might have actually improved with that announcement.
Even as an Isis participant, Discover is better off sharing the spotlight with other networks, Taiano said. "It seems like [Isis] was sort of doomed to fail from the beginning because of the closed structure."
David Nelms, Discover's chairman and chief executive, said the network has expanded its capabilities, working with Google Inc. and PayPal Inc., among others, on mobile wallet systems.
"I would actually say that we are involved in more facets than most other players," Nelms said in an interview. "Visa and MasterCard don't have any consumers directly. They are really involved in the acceptance side. We are involved, because we are a network and an issuer. We are fairly unique."
Analysts agreed that widespread mobile payments adoption is so far off in the future — at least two years away by Nelms' estimate — that it would be premature to speculate how Discover will fare.
Taiano said Discover is diversifying in areas beyond payments.
"Whether it's student loans or other types of loans, I think that's where they are aiming," he said.
Discover, which bought Student Loan Corp. for $600 million in January, said in May that it had agreed to buy the assets of Tree.com Inc.'s mortgage origination subsidiary, Home Loan Center, for $55.9 million.
Discover's net income for its second quarter, which ended May 31, rose 133% year over year, to $600 million.
Its net revenue rose 7%, to $1.7 billion, and its chargeoff rate fell to 5.01%, f
