Discover Financial — BrandWiki

Discover Financial

Overview

Discover Financial Services, Inc.

type	Subsidiary
traded as	(2007–2025)
founded	1985
defunct	May 18, 2025
fate	Acquired by Capital One
founder	Sears
hq location city	Riverwoods, Illinois
hq location country	U.S.
key people	Michael Rhodes (CEO) Thomas Maheras (chairman)
industry	Financial services
products	Payment systems, Credit cards, Finance, Consumer banking, Loans
revenue	US$20.61 billion (2023)
operating income	US$3.83 billion (2023)
net income	US$2.94 billion (2023)
assets	US$151.5 billion (2023)
equity	US$14.83 billion (2023)
num employees	c. 21,100 (2023)
subsid	Diners Club International Discover Bank Discover Network Pulse
parent	Dean Witter Reynolds (1985–1997) Morgan Stanley (1997–2007) Capital One (2025–present)
website	https://discover.com
footnotes	‡R1R‡

Discover Financial Services, Inc. was an American financial services company best known for its Discover Card. Founded in 1985, the company offered a wide range of banking and payment services, including checking and savings accounts, personal loans, home equity loans, and credit cards. It owned and operated the Discover network and Pulse, and owned Diners Club International. Discover Card is the third largest credit card brand in the United States, when measured by cards in force, with nearly 50 million cardholders.[2][3]

Discover was acquired by Capital One on May 18, 2025. As a result of the acquisition, all Discover Financial brands would be offered as the Capital One brands and services.

History

In 1981, Sears

Acquisitions

Acquisition of The Greenwood Trust Company

The Greenwood Trust Company was founded on August 30, 1911, and was based in Greenwood, Delaware. It was acquired in 1985 and renamed Discover Bank on August 1, 2000.[15] Discover Bank is mainly an online financial institution that offers many financial services such as checking accounts, savings accounts, and money market accounts. However the first and original location of the Greenwood Trust Company on 502 East Market Street is still operating and is the only physical banking location of Discover Bank. Discover Bank operates as a subsidiary of Discover Financial Services and is FDIC insured.[16]

Acquisition of Pulse

In 2008, Discover Financial Services acquired Pulse, an interbank electronic funds transfer payments network. This allowed Pulse and its more than 4,000 member banks, credit unions, and savings institutions to join with the Discover Network's four million merchant and cash access locations. Additionally DFS now had the ability to market and issue debit and ATM cards. In February 2006, DFS announced that it would begin offering Discover debit cards to other financial institutions, becoming the first credit card services company to compete directly with MasterCard and Visa in the rapidly growing signature debit market.[17]

Acquisition of Diners Club International

In April 2008, Discover Financial and Citigroup announced that Discover was purchasing the Diners Club International network from Citigroup for $165 million. In May 2008, the Federal Trade Commission approved the transaction and it was finalized in July 2008.[18] Discover stated that the Diners Club network, which is a major network outside the United States, will be merged with the Discover Network, a major network in the United States. The creation of an international network for Discover and Diners Club cardholders allowed customers to expand their global reach. Diners Club cards will continue to be issued by Diners Club International licensees. At this time, Discover Bank has no plans on issuing Diners Club branded cards itself.

Acquisition of Student Loan Corporation

In September 2010, Discover Financial Services announced it would acquire Citigroup-owned Student Loan Corporation for $30/share.[19] The deal was finalized in December 2010, renamed Discover Student Loans, and expanded DFS's market presence and origination capabilities in private student loans.[20] In 2014, DFS launched Rewards for Good Grades, rewarding college and graduate students who get at least a 3.0 GPA (or equivalent) a one-time cash reward equal to 1% of the loan amount on each new Discover student loan. In 2015, DFS introduced an interactive tool called FAFSA Assistant to help students and their families get ready to complete the FAFSA. The tool provides individualized tips and guidance based on personal situations.

Acquisition of Home Loan Center

In June 2012, Tree.com, Inc. completed the sale of substantially all of the operating assets of its Home Loan Center, Inc. business to a wholly owned subsidiary of Discover Financial. In exchange for the assets sold, Discover paid an aggregate of $45.9 million including payments made prior to the closing which were applied to the closing price.[21] In June 2012, Discover began originating mortgages with its launch of Discover Home Loans, offering prime variable- and fixed-rate conventional and FHA home mortgage loans. In 2013, Discover's Home Loans business started offering home equity loans.[22] As of 2023, the only home loans Discover originates are home equity loans and mortgage refinances.

Business developments

In 1989, Discover Network signs its one-millionth merchant, Vincente's Restaurant, in Wilmington, Delaware.[23]

In 1995, the discovercard.com website was launched.

In December 1998, the company introduced Discover Platinum, a premium card featuring new ways to increase rewards, low balance transfer and annual percentage rates, no annual fee, and expanded credit lines.

In December 2001, fourth-quarter income at Discover grew 31% to $193 million, compared with $147 million the year before.[24]

In 2002, Discover launched the industry's first keychain credit card. It was named the Discover 2GO card and was recognized as one of the "Best Products of 2002" by editors and reporters from Business Week and USA Today.

In March 2002, the company announced that the Account Center at Discovercard.com had registered over eight million card members, an increase of 61% since January 2001.[25]

In September 2002, Discover announced that Citibank would accept the Discover Card for cash advances at its approximately 450 Financial Centers and more than 2,000 ATM locations nationwide.[26]

In 2003, Discover introduced gas and miles rewards cards. The Gasoline Card (renamed Open Road in 2007) awarded 5% Cashback Bonus on gas purchases. The Miles Card by Discover allowed redemption with as little as 2,500 miles for non-flight reward options. Discover also introduced the option for paperless statements.

In October 2004, the Supreme Court upheld a ruling in Discover's favor that challenged exclusionary policies of Visa and MasterCard, stating that Mastercard and Visa were violating antitrust regulations with anticompetitive practices. Before this ruling, Visa and MasterCard would not allow banks to issue a Discover or American Express card if they issued a Visa or MasterCard. Within days of the court ruling, Discover filed a lawsuit in federal court seeking damages from Visa and MasterCard. In October 2008, DFS was awarded $2.75 billion in damages, the third largest settlement at the time in U.S. history. Shortly after the Supreme Court ruling, Discover struck its first deal to have its cards issued by another financial institution, GE Consumer Finance, which began to issue credit cards for retailer Walmart and its wholesale warehouse stores, Sam's Club.[27] Transactions were processed on the Discover Network. Sam's Club exclusively accepted Discover for many years; since November 2006, it has also accepted MasterCard for purchases. In April 2014, Walmart announced that they were ending their relationship with Discover and would begin converting all Discover-branded cards to Mastercard beginning in June 2014.[28]

HSBC has issued Discover-branded credit cards processed through the Discover Network since its acquisition of card issuer Metris in late 2005. Metris had originally signed an agreement with Discover in September 2005, three months prior to the HSBC acquisition.

In 2006, Discover Network united with Visa, MasterCard, American Express, and JCB to form the Payment Card Industry (PCI) Security Standards Council, which helps to manage account security throughout the transaction process. Also in 2006, DFS also launched the Discover Business Card, offering a single payment solution for small business owners. In July 2006, DFS and First Data Corp. announced that First Data would offer Discover Network card services to small- and mid-sized merchants.

In March 2007, Discover Financial Services announced the Discover Motiva card, a card that offers cash rewards for making six on-time monthly payments in a row. The card was the industry's first credit card to give cash rewards for good credit management. Later in the year, DFS announced the Discover More card to replace the Discover Platinum card. The Discover More card was designed for consumers who use credit in many different categories and provided them with more ways to earn cash back on their purchases.

Following the 2008 financial crisis, Discover received about $1.2 billion in bailout funds under the Troubled Asset Relief Program (TARP). The company announced in 2010 that it had received approval to pay back the funds.[29]

In 2009, Discover Financial Services introduced the Spend Analyzer tool, an online tool that provides cardmembers with a visual representation of their Discover card purchases for the past 24 months.

In 2010, Discover Financial Services and Softcard announced a strategic partnership to build a mobile payment network that utilizes mobile phones to make point-of-sale purchases.

In September 2012, Discover Financial Services was ordered to pay over $200 million in fines and customer reimbursements to settle accusations by U.S. federal regulators that it had engaged in deceptive telemarketing tactics.[30]

In 2012, Discover Financial Services announced a five year, $10 million commitment called Pathway to Financial Success to help bring financial education curriculum to public high schools across the US.

In 2013, Discover Financial Services and PayPal partnered to enable merchants to accept PayPal through their existing relationship with Discover. The same year, Discover Cashback Checking was introduced. The checking account product paid customers ten cents for every debit card purchase, online bill payment, and check written. Additionally, the Discover it card was announced. The card rewards cardmembers with 5% cash back in rotating categories each quarter, such as at gas stations or restaurants. Discover also introduced Discover Home Equity Loans. Discover also became the first major credit card issuer to provide free access to FICO Credit Scores based on TransUnion data directly to its cardmembers on their monthly statements. Additional information provided with their FICO Credit Scores were educational content to help them better understand their scores.

In 2014, Discover Financial Services launched Discover it Chrome for Students, allowing students to establish credit while earning 2% at gas stations and restaurants.

In 2015, Discover Financial Services launched Discover it Miles, which rewards 1.5 miles per dollar spent.

In 2016, Discover Financial Services launched Discover it Secured for consumers looking to build their credit. Additionally, DFS expanded FICO Credit Scores based on TransUnion data for free to everyone via a platform called Credit Scorecard, which also included a summary of the data that helps determine an individual's FICO Credit Score.

In 2017, Discover Financial Services launched a free service called Discover Identity Alerts to notify cardmembers if their social security numbers are found on risky websites and if any new accounts are opened on their Experian credit report.

In 2018, Discover Financial Services announced a change to its checking account rewards program, a reward of 1% cash back on up to $3,000 in qualifying debit card purchases each month. Additionally DFS also introduced First Fee Forgiveness, a new program that automatically waives the first eligible fee each calendar year for certain Discover accounts. Eligible fees included insufficient funds, stop payment, excessive withdrawal and Money Market minimum balance fees. For its US-based employees, DFS launched the Discover College Commitment, offering employees a full ride bachelor's degree program covering tuition, required fees, books, and supplies for select online degree programs. In September, DFS launched the Discover it Business card, offering unlimited 1.5% cash back on all purchases, as well as free business and security features.

In 2019, Discover Financial Services' subsidiary Discover Bank eliminated most fees on its deposit products. Additionally, Discover Home Equity Loans surpassed $1 billion in funded loans. DFS also launched contactless cards this year.[31]

In 2021, Discover Bank originated 14,148 mortgages worth $1.3 billion.[32]

In February 2024, Capital One announced it had entered into a definitive agreement to acquire Discover Financial in a $35.3 billion all-stock deal.[33]

In April 2025, Capital One Financial’s application to acquire Discover Financial was approved by the Federal Reserve and the Office of the Comptroller of the Currency.[34]

In May 2025, it was reported Discover Financial would be removed from the S&P 500, being replaced by Coinbase from May 19.[35]

Discover Global Network

Discover Financial Services has three payment systems that constitute its Discover Global Network: Discover Network, Diners Club International, and Pulse.[36] Since 2005, to increase acceptance of its payment cards around the world, Discover formed several agreements with other payment networks internationally. This allows Discover cardholders to perform transactions while traveling abroad, and cardholders of other countries may utilize their cards at US merchants and financial institutions that accept Discover.[37]

Some major credit and debit partners include:[38] Some major debit partners include:[40]

With these and many other global partnerships, Discover is accepted in 200+ countries and territories.[41]