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The number of U.S. merchants able to accept Discover card transactions will reach 97% by the end of the first quarter of 2010, a Discover Financial Services executive said Tuesday at the Electronic Transactions Association Compliance Day event in Las Vegas. Jennifer Schroeder, Discover director of processing partnerships, says that projected figure is 20 points higher than Discover's merchant acceptance percentage at the end of 2005, when 77% of merchants accepted Discover transactions. At the end of 2008, the figure stood at 90% of U.S. merchants, she says. Schroeder attributed the increase to the third-party merchant acquiring agreements Discover began signing in 2007 after announcing in 2006 it would open its network. These agreements, which enable a merchant to receive combined billing and statements for their card transactions, have increased the percentage of merchants that actually activate Discover acceptance, she said. Previously, merchants had to have a separate contract with Discover. Many third-party acquirers either are or use independent sales organizations to sell the combined processing services to merchants. "We know this increase is a direct result of this work and the partnerships we've put together," Schroeder said. Since then, Discover has signed 94 merchant acquiring agreements that account for 98% of the U.S. bankcard sales volume, Schroeder says. In the two-year period of 2007 and 2008, Discover has seen a 16% increase in the number of active merchant locations, compared with a rate of 8% for a typical two-year period, Schroeder said. "Active merchant growth isn't keeping pace with the number of merchants that are being enabled," she said. "This leads is to be more aggressive with our marketing initiatives." She says Discover is using merchants and consumers in Houston as a test bed for this marketing push with local advertisements to both groups. "The goal is to drive more volume in 2009," she said.
