Discover Financial Services is getting into the person-to-person payments game with PayPal Inc. following the recent rollout of competing services from Visa Inc. and American Express Co.
Discover later this month plans to release Money Messenger, a service based on PayPal technology that lets the Riverwoods, Ill.-based company’s cardholders to send funds to anyone, including noncardholders.
Payments will show up as a normal card transaction in a customer’s account and will also allow a cardholder to earn cash-back rewards like they would on other purchases.
A Discover spokesperson said on Wednesday that an executive was not available to discuss the service but in e-mailed responses to questions wrote that Money Messenger would give cardholders “another way to help them earn rewards” and allow them to “consolidate and track more of their spending on one payment vehicle.”
Dan Schatt, PayPal general manager of financial innovations, said in an interview this week at NACHA’s annual conference in Austin, Texas, that the service is the latest example of how the eBay Inc. subsidiary is trying to work more closely with traditional financial-services companies, many of which view the company as a rival.
“It’s going to basically give Discover, and any card network and any card issuer that’s interested in doing the same thing, the opportunity to break into the cash market and check market in a major way,” Schatt said.
Discover does not plan to charge customers for the service, which it first announced in October. Discover cardholders will be able to access the service on the issuer’s website, from its mobile browser site, and through applications for iPhone, Android and BlackBerry smartphones.
To send funds, a cardholder would need the recipient’s e-mail address or phone number.
The service is branded by Discover but includes a “Powered by PayPal” logo, according to a video demo that Schatt played.
Recipients would have to set up a PayPal account to access funds if they do not have one already.
The service eventually could help Discover expand acceptance of its cards, says Zilvinas Bareisis, a senior analyst in London with the research firm Celent. The “additional brand exposure” will “probably be meaningful over the course of time,” Bareisis says.
Money Messenger is the latest P2P service to be announced by a credit card company.
American Express Co. in March announced Serve, a digital wallet that enables users to register multiple cards, including non-AmEx ones, for funding transactions (
Visa also announced last month a service that enables one cardholder to transfer funds to another cardholder (
MasterCard also offers a P2P service called MoneySend through its issuing banks based on technology from software vendor Obopay Inc. (
