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This column appears in the November 2009 issue of Cards&Payments.
It's interesting that Discover Financial Services is working to expand international acceptance of Diners Club and Discover cards for cash withdrawals by striking deals with ATM networks and by using its Pulse electronic funds transfer network as its main catalyst. But what's equally interesting is how coy Discover is when discussing any plans about expanding acceptance of Pulse globally at the point of sale or about the possibility of creating a new PIN-debit brand.
Didn't merchant acceptance of PIN-debit cards in the U.S. similarly begin with EFT networks, including Pulse, connecting ATMs, at first regionally and then nationally, through gateway agreements with other EFT networks? I believe it did. Could Discover be planning a similar strategy as it grows internationally? Possibly.
In this month's cover story by Cards&Payments Associate Editor Kate Fitzgerald, we examine Discover's recent moves to strike deals with partners in Canada, Europe and India (
Asked if Discover would begin to issue PIN-debit cards overseas, Diane Offereins, the company's executive vice president of payment services who oversees the Discover, Pulse and Diners Club brands, indicated that could be a possibility. "We have not made a hard decision on that," she said.
I've wondered ever since Discover acquired Pulse in November 2004 what the credit card issuer would do with a PIN-debit network. At the time of the acquisition, David Nelms, Discover chairman and CEO, said Discover would use the deal and Pulse's access to some 6,000 financial institutions to become the third major sponsor of signature-debit cards. But Discover has had little success since to develop such a program. One problem it may have found is that issuers prefer international acceptance, which debit MasterCards and Visa check cards support.
Perhaps Discover now owning Diners Club and working to expand that brand globally will help rectify the situation. Maybe Discover might find better growth success with charge cards, which essentially are delayed debit products, than with a pure signature-debit program.
Though Discover's overall goals remain murky, what is clear is that its efforts to grow outside the U.S. represent a smart move. The U.S. market is saturated, and there's still plenty of room to grow–and experiment–in other parts of the world.
Jeffrey Green
Editor-in-Chief
Cards&Payments
