Discover Financial Services LLC of Riverwoods, Ill., said its deal to use Total System Services Inc. for processing will help its efforts to win more issuing partners.
By early next year issuers that work with the Columbus, Ga., processor, which is majority owned by Synovus Financial Corp., will be able to issue Discover cards.
"The key significance is this gives issuers options," David Goodridge, Discover's director of issuance, said in an interview Tuesday. "It allows those issuers who process on TSYS the ability to issue cards on Discover network."
Discover has 12 card-issuing partners, two of which are expected to process through TSYS next year. Mr. Goodridge said that he could not estimate how many new cardholders the processor deal would generate, but that Discover is reaching out to more processors to give issuers even more options.
The processing deal followed a September 2006 one in which TSYS Acquiring Solutions of Tempe, Ariz. agreed to offer Discover cards to its bank partners. That deal was one of many Discover made with merchant acquirers to increase its acceptance, and Mr. Goodridge said those deals are being handled separately from the deals with processors.
The processor agreements are meant to expand Discover's issuance by financial companies with which it has direct relationships, whereas the acquirer deals are meant to expand Discover's issuance among banks that work with an acquirer. As part of Discover's work with acquirers, it is moving some of its direct contracts it signed through referrals with the acquirers to the acquirers themselves.
The most recent of those acquirer deals was a September agreement with Chase Paymentech Solutions LLC, a merchant acquiring joint venture of First Data Corp. and JPMorgan Chase & Co.
