Discover's merchant acceptance skyrockets

Card company attributes success to third-party agreements

By Seamus McAfee

The Discover card, once the black sheep of branded credit cards, received some vindication April 21, when Discover Financial Services executives announced the card was projected to reach 97 percent of merchant acceptance in 2010.

The projected figure is 20 percentage points higher than Discover's acceptance among merchants less than four years ago, said Jennifer Schroeder, the company's director of processing partnerships. Discover has been expanding its range steadily in the past few years, reaching 77 percent of merchants at the end of 2005, and 90 percent of merchants at the end of 2008.

Schroder said the growth of card acceptance can be traced back to 2007, when Discover began signing more third-party merchant acquiring agreements -- contracts which allow a merchant to receive combined billing and statements for card transactions. In the past, merchants had to have a separate contract with Discover. Now, third party acquirers use sales organizations to sell the combined processing services to merchants, Schroeder said.

Schroeder said that since 2007, Discover has signed 94 merchant agreements, acquiring a stake in 98 percent of the U.S. bankcard sales volume.  "The goal is to drive more volume in 2009," she said. 

Published: April 24, 2009