As banks race to cover all of their payments bases, one of the more exciting players to watch is Discover Financial Services.

The card issuer and payments services company wasted little time in making inroads with banks since the U.S. Department of Justice's landmark 2004 ruling found Visa and MasterCard guilty of violating antitrust laws by prohibiting banks from issuing cards on the Discover Network (In October, Discover reached a settlement with Visa and MasterCard for $2.75 billion in damages). Discover also got a boost with its 2007 spinoff from Morgan Stanley, a merger widely regarded as ill conceived.

Just how much does Discover have going on? Plenty - and it's showing few signs of slowing down, despite a tough economic environment. Since 2005, the company's transaction volume has jumped from $79 billion to $200 billion, thanks to its transformation into a global business, according to Harit Talwar, evp of Discover Network.

The key to Discover's continued growth and profitability will be pegged to five initiatives: full acceptance of the Discover Card in the U.S.; the sustainability of a broad range of credit and debit products; the rise of PULSE as one of the fastest-growing networks; greater affinity for Diners Club globally; and more coveted merchant relationships through bank partnerships. "What we like about [our position] is that it's a good mix between credit and debit, between proprietary and third-party volume, and U.S. and non-U.S. [market share]," said Talwar in a recent interview.

While net income for the third quarter was $180 million, down from $202 million for the same period in 2007, Discover posted growth in several areas: managed loans grew six percent over 2007 to $50 billion; Discover Card sales grew five percent to $25 billion; revenue net of interest expense increased eight percent from last year; and third-party payments volume grew 48 percent to $35 billion, including $5 billion of Diners Club International volume.

The acquisition of Diners Club figures heavily into Discover's global payments strategy. Its popularity in certain international markets - the Diners Black card fetches a $1,200 annual membership fee in Japan, for example - is helping the company to test the limits of affinity and loyalty, an exercise it hopes will be instructive in other markets.

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