Discover Financial Services’ agreement with online-payments specialist Mazooma illustrates Discover’s goal to be in the forefront of all payments services, not just those related to credit or debit cards, a top executive with the card brand tells PaymentsSource.
Discover and Mazooma announced July 20 plans to make Mazooma’s micropay-in-a-box available as a payment option at Discover merchant websites for purchases of digital content costing less than $20 for shoppers wanting to pay from their bank account through online banking (
“This shows we are more than a credit card company, and we can’t ignore alternative-payment methods because they are evolving rapidly,” says Farhan Ahmad, Discover director of emerging payments and prepaid. “A niche commerce like this didn’t exist four years ago.”
Discover worked for about 36 months in forming its partnership with Mazooma, which began operations in 2009, Farhan says. Because the Mazooma payment option for customers shopping online with a Discover merchant eliminates the need for a credit card, Farhan says the message to those merchants is “Discover believes in choices,” even though they may compete with the credit card business.
“The value for Discover is that if merchants want Mazooma, we will facilitate those transactions,” Farhan says.
It benefits Discover to work with innovative alternative payment startup companies and foster new business models instead of compete against them, Farhan says. “It’s rare for a payments network to say that,” he adds.
Farhan acknowledges the partnership is “Mazooma’s business model,” and he did not want to speculate on how many merchants or users may use the service. He also would not elaborate on Discover’s fees or potential revenue resulting from the service, which is designed to lower merchants’ overall costs by eliminating card-acceptance fees on purchases of digital music, books, games and video.
“We hope Mazooma is very successful,” Farhan says. “These people are very innovative in the marketplace.”
