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 purchased the Dean Witter Reynolds brokerage firm organization and Coldwell, Banker & Company (real estate franchise)[4] as an attempt to add financial services to its portfolio of customer services. In 1985, Sears also acquired the Greenwood Trust Company. Altogether, these companies operated as a Sears subsidiary called Dean Witter Financial Services Group, Inc. The plan to create a one-stop financial-services center in Sears stores was not as successful as Sears had hoped. Its credit card operations accounted for a loss of $22 million in the fourth quarter of 1986 (equivalent to $ million in ), and a loss of $25.8 million in the first quarter of 1987 (equivalent to $ million in ).[5]
In March 1993, Sears sold off its financial services branch as a new independent publicly traded company called Dean Witter, Discover & Co. with Dean Witter Reynolds in charge.[6] This company had a stock ticker symbol of DWD.
In 1995, Discover Card Services, Inc. changed its name to NOVUS Services, Inc. to distinguish its network functions from the Discover Card.
In 1997, this company merged with investment banking house Morgan Stanley to become Morgan Stanley Dean Witter, Discover & Co.
In February 1999, the company rebranded itself "Discover Financial Services, Inc."[7] The NOVUS logo was retired, replaced by the Discover Network logo.
In April 2005, Morgan Stanley announced that it would divest Discover Financial Services as an independent company within six months. By June, industry sources reported that Morgan Stanley was reassessing its plan to spin off Discover. In August, the company confirmed it would not sell Discover. However, in December 2006, during a fourth quarter earnings report, Morgan Stanley CEO John J. Mack announced Discover would be spun off as a standalone publicly traded company by the end of August 2007, stating that both companies will be better positioned for growth and success as separate entities.[8] Ahead of schedule in June 2007, Discover was spun off as an independent, publicly traded company.[9] It began trading on the NYSE for the first time in July 2007 under the stock symbol DFS.
In February 2024, Capital One announced its intention to acquire Discover in an all-stock deal worth $35.3 billion.[10] That Spring, the Attorney General of New York launched an investigation into whether the proposed takeover of Discover would violate state anti-trust laws.[11] In July 2024, a proposed consumer class action lawsuit was filed in Virginia, claiming that the acquisition would be in violation of federal antitrust laws.[12] The deal was approved by U.S. banking regulators in April 2025.[13] On May 18, 2025, the merger between Discover and Capital One was completed.[14]
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.
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.
Advertising
From 1998 to 2007, Discover Card owned a billboard at One Times Square, just above the flagpole where the Times Square Ball is placed, until Toshiba bought the space. As a result, its logo could be seen on national television during New Year's Eve, while the ball dropped. Discover also sponsored the ball drop itself.[42][43]
From its opening in 2001 to 2012, Sugarloaf Mills Mall in Lawrenceville, Georgia, was named Discover Mills in a naming rights partnership with Discover Card. The slogan for the mall was "Where Discover Card is the Smart Choice." It was the first shopping mall to have granted naming rights to interested companies.[44][45] Since 2008, Discover has been the official credit-card partner of the National Hockey League. As part of this deal, Discover offers team- and league-branded credit cards as well as a 10% discount on purchases made from the NHL's online store using Discover.
Business
In addition to its card products, Discover Financial Services also markets savings products, checking accounts, personal loans, student loans, identity protection, and home equity loans.[46]
Competitors
In the United States, Discover, as a card network, competes primarily with Visa, MasterCard, and American Express.[47] Unlike Visa and MasterCard, Discover directly issues its cards as both the card network and associated bank, through its Discover Bank unit.[48] When measured by card balances, Discover is the sixth largest credit card issuer in the U.S. behind JPMorgan Chase, Citigroup, Bank of America, Capital One and American Express, and ahead of Wells Fargo and U.S. Bank.[49]
External links
References
- Annual Report 2023 (SEC Form 10-K) U.S. Securities and Exchange Commission, February 23, 2024, retrieved February 23, 2024^
- Poonkulali Thangavelu. Credit Card Market Share Statistics Bankrate, retrieved 2023-11-21^
- Hitesh Khunt. Top 10 U.S. Credit Card Companies by Purchase Volume