Discover card credit
America has been a world leader in the financial field for the greater part of the last century. The credit card is an American innovation. With its advent finance and purchases have never been the same. With one and a half billion cards in circulation the United States has set a new precedent to the world financial markets. Discover card is one of the credit cards issued along with Master and Visa. This card was introduced by Sears Corporation.
Discover Card is mainly issued in the United States. Presently the penetration of this brand in the Global scenario is minimal. In the United States there are nearly 50 million cards in circulation. The history of the card dates to 1985 when Sears launched the Discover card and presented it to the American people. Today it is operated as a subsidiary of Morgan Stanley and has its HQs at Riverwoods, Illinois
Sears who conceived the Discover card originally is the Sears Holdings Corporation, the publicly traded face of Kmart and Sears. It is one of the largest retail chains in the United States, having annual revenue of nearly $55 billion. The Sears Corporation owns nearly 3000 stores all over the United States and Canada. The Discover bank issues the Discover cards. All Discover card transactions are processed through the Discover Network payment network. Discover acquired Pulse in 2004 and since Feb 2006 supports the Discover Debit cards. Pulse is worldwide leader in electronic component design and manufacturing and is now associated with the Discover card.
When Sears launched its credit card it was the largest retailer in the United States. Sears added to its financial muscle by purchasing the Dean Witter Reynolds Organization a brokerage company and Coldwell, Banker & Company dealing in real estate in 1981. They followed these purchases and set up The
Sears Financial Network. The earliest Discover Cards had an embossed symbol of the Sears Tower the companys headquarters in Chicago.
However, Sears failed in its attempt to set up a financial Network with the Sears stores as its epicenter. Sears perforce had to rethink on this aspect.
An attempt by Citi bank at creating a credit card to rival MasterCard and VISA had failed. However Discover Cards in contrast to the City card quickly gained a large national consumer base. City banks choice card which had flopped was reissued as visa card in 1987. The Discover card had some new innovations. Firstly no annual fee was charged and secondly it offered a higher credit limit than other cards. Both these benefits were something new at that time. In addition Discover card holders could also earn a Cash back Bonus. This was calculated as a percentage of the amount spent. Sometimes this was as high as 1%; depending on its usage and money spent The Discover Card did have some initial success as the U.S. Customs Service accepted Discover cards for paying customs duty.
With the introduction of the Discover card, Searss stores stopped accepting Visa and Master credit cards. This had an adverse effect on the sale of goods at Sears Stores. It also alienated customers thus adversely affecting the profitability of the company.
The difficulties of Sears increased. In addition strong competition from Wal-Mart and other retailers forced Sears to have a rethink. They thus had to change their strategy. As Sears was not accepting master and Visa cards its finances began to flounder. So Sears sold its financial businesses in 1993. After the sale of its credit card business Sears stores started accepting Master and Visa cards again. The Discover Card now became the property of Dean Witter financial services firm. This firm merged with Morgan Stanley in 1997.
Master and Visa establishments however did not accept Discover and tried to throttle the product. Both these brands refused permission to Banks who issued their cards to issue Discover cards. Discover went to court against this policy of Master and Visa in October, 2004. The Supreme Court gave a ruling in Discover Card's favor. Prior to this ruling, Visa and MasterCard would not permit banks to issue a Discover Card if they issued a Visa or MasterCard.
After the Supreme Court ruling in its favor Discover Cards did not waste any time and promptly filed a lawsuit in federal court seeking damages from both Visa and MasterCard. At the same time GE Consumer Finance struck an agreement with Discover to issue cards under their aegis. This Bank now issues for retailer Wal-Mart and its wholesale warehouse stores, Sam's Club also.
In 2005, Discover Card acquired PULSE, an EFT association. This allows it to issue and market debit cards.
Presently the Discover cards are accepted at early 4 million merchant establishments and cash access locations with ATMs. In addition nearly 4100 banks, credit unions and saving institutions accept the Pulse ATM network. Discovers competitors like Visa and Master are accepted all over the world, but Discover cards are presently limited mainly to the United States. The card is not issued worldwide nor is it widely accepted outside the United States. But there is a silver lining in the fact that the discover card can be used at ATMs all over the world to draw cash.
Discover brand cards have low acceptance in Canada. In Canada only a few businesses which cater to American tourists, such as car rental agencies and hotels, as well as major American merchants like Sears accept this card. Canadian business establishments that do accept Discover cards still prefer Visa, MasterCard and American Express. Discover cards cannot be used to access cash at ATMs in Canada at present. But card members can access cash at any of the Sears stores in Canada.
Despite the handicap Discover has made a foray into the Caribbean and Mexico where Discover cards have been accepted. In Europe the Discover card is still not accepted. A big scoop for Discover was in May 2005 when the Discover Network formalized an alliance with China Union Pay Network. Thus Discover has moved into the massive Chinese market. Discover however has a long way to go to catch with Visa and Master whose presence is now worldwide. Discover also needs to attend to growing markets like India and SE Asia including Japan, if it has to compete successfully against master and Visa. The Discover card is however an excellent card to possess as it also empowers customers to have another choice
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