Discover Financial

Discover Financial Services, Inc.
TypeDefunct
NYSE: DFS (2007–2025)
IndustryFinancial services
Founded1985 (1985)
FounderSears
DefunctMay 18, 2025 (2025-05-18)
FateAcquired by Capital One
Headquarters
Riverwoods, Illinois
,
U.S.
Key people
ProductsPayment systems, Credit cards, Finance, Consumer banking, Loans
RevenueIncrease US$20.61 billion (2023)
Decrease US$3.83 billion (2023)
Decrease US$2.94 billion (2023)
Total assetsIncrease US$151.5 billion (2023)
Total equityIncrease US$14.83 billion (2023)
Number of employees
c. 21,100 (2023)
Parent
Subsidiaries
Websitediscover.com
Footnotes
[1]
1936 postcard of the Greenwood Trust Company
Diners Club Arena in the Canton of St. Gallen, Switzerland was sponsored by Diners Club International from 2005 to 2016
Discover advertisement on One Times Square in 2006
Discover advertisement on dasherboards at a 2014 NHL Stadium Series game at Soldier Field, Chicago

Discover Financial Services, Inc. was an American bank holding company that offered consumer banking products and owned Discover Card, Pulse, and Diners Club International. In May 2025, the company was acquired by Capital One.

History

In 1981, Sears, Roebuck and Company purchased Dean Witter Reynolds, a brokerage firm, and Coldwell Banker, a real estate franchise,[2] as an attempt to add financial services to its portfolio of customer services. In 1985, Sears also acquired the Greenwood Trust Company. These companies operated under 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, and a loss of $25.8 million in the first quarter of 1987.[3]

In 1985, the company acquired The Greenwood Trust Company, founded in 1911 in Greenwood, Delaware. It was renamed Discover Bank in August 2000.

In March 1993, Sears completed the corporate spin-off of its financial services branch as a public company called Dean Witter, Discover & Co.[4]

In 1995, Discover Card Services, Inc. changed its name to NOVUS Services, Inc. to distinguish its network functions from the Discover Card.

In 1995, the discovercard.com website was launched.

In 1997, the company merged with Morgan Stanley to become Morgan Stanley Dean Witter, Discover & Co.

In October 1998, the company rebranded itself "Discover Financial Services, Inc." The NOVUS logo was retired, replaced by the Discover Network logo.[5]

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 2002, Discover launched the industry's first keychain credit card.

In October 2004, the Supreme Court of the United States 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 card by 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.[6] 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 ended its relationship with Discover. Walmart began converting all Discover-branded cards to Mastercard beginning in June 2014.[7]

In January 2005, Discover Financial Services acquired Pulse, an interbank electronic funds transfer payments network, for $311 million. The acquisition enabled the company to offer debit cards.[8][9]

HSBC 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.

In June 2007, Morgan Stanley completed the corporate spin-off of Discover.[10]

In July 2008, Discover Financial acquired the Diners Club International network from Citigroup for $165 million.[11]

Following the 2008 financial crisis, Discover received about $1.2 billion in bailout funds under the Troubled Asset Relief Program (TARP). In 2010, the company repaid the funds.[12]

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 2010, Discover Financial Services announced it would acquire Citigroup-owned Student Loan Corporation.[13] The deal was finalized in December 2010, renamed Discover Student Loans, and expanded DFS's market presence and origination capabilities in private student loans.[14] 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.

In June 2012, LendingTree completed the sale of substantially all of the operating assets of its Home Loan Center business to a wholly owned subsidiary of Discover Financial for $45.9 million, including payments made prior to the closing which were applied to the closing price.[15]

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.

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.[16]

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 in 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.

DFS 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 2021, Discover Bank originated 14,148 mortgages worth $1.3 billion.[17]

Acquisition of Discover Financial by Capital One
InitiatorCapital One
TargetDiscover Financial
TypeFull acquisition
CostUS$35 billion
InitiatedFebruary 19, 2024
CompletedMay 18, 2025

In February 2024, Capital One agreed to acquire Discover Financial in an all-stock deal worth $35.3 billion, making it the largest credit card issuer in the U.S.[18][19][20] The deal was approved by U.S. banking regulators in April 2025 after an investigation by the Attorney General of New York and a proposed consumer class action lawsuit by customers on anti-trust concerns.[21] The acquisition was completed in May 2025.[22][21][23]

Advertising and sponsorships

From 1998 to 2007, Discover Card owned a billboard at One Times Square, just above the flagpole where the Times Square Ball is placed and Discover sponsored the annual ball drop.[24][25]

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.[26][27]

Beginning in 2010, Discover was the official credit-card partner of the National Hockey League.[28]

In 2011 and 2012, Discover Card's float won the Grand Marshal award for excellence in creative concept and design in the Rose Parade in Pasadena.[29]

From 2011 to 2013, Discover was the sponsor of the college football Orange Bowl. It was also the sponsor of the 2013 BCS National Championship Game.[30][31]

In 2017, Discover was named the first ever presenting sponsor and official credit card of the Big Ten Football Championship Game as part of a multi-year sponsorship.

References

  1. ↑ "Annual Report 2023 (SEC Form 10-K)". United States Securities and Exchange Commission. February 23, 2024.
  2. ↑ "A Brief Chronology of Sears History". Sears Brands, LLC. Retrieved August 12, 2009.
  3. ↑ Barmash, Isadore (April 22, 1987). "Sears Net Rises 47.4% in Quarter". The New York Times.
  4. ↑ "Sears completes spinoff of its Dean Witter, Discover & Co. stake". United Press International. June 30, 1993.
  5. ↑ "NOVUS renamed Discover Financial". United Press International. October 14, 1998.
  6. ↑ Kingson, Jennifer A. (March 26, 2005). "Credit Card Issuers Adjust to Open Field". The New York Times. ISSN 0362-4331.
  7. ↑ "Wal-Mart taps MasterCard for store-branded credit card". St. Louis Post-Dispatch. April 5, 2014.
  8. ↑ "Discover Financial Services Breaks into Signature Debit Market with Introduction of Discover Debit". Inside ARM. September 12, 2006.
  9. ↑ "About Us". Morgan Stanley.
  10. ↑ "Morgan Stanley Announces Record and Distribution Dates for Spin-off of Discover" (Press release). Morgan Stanley. June 1, 2007.
  11. ↑ "Discover Completes Diners Club Purchase". Inside ARM. July 1, 2008.
  12. ↑ "Discover Lifts The TARP". Forbes. March 17, 2010.
  13. ↑ "Discover Financial buying Citigroup's Student Loan Corp". Crain's Chicago Business. Associated Press. September 17, 2010.
  14. ↑ Shoai, Zaeem (January 10, 2011). "Discover closes acquisition of Student Loan Corp" – via ProQuest.
  15. ↑ "Tree.com Completes Sale of Certain Assets of Home Loan Center, Inc. to Discover" (Press release). LendingTree. June 7, 2012.
  16. ↑ "Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing" (Press release). Consumer Financial Protection Bureau. September 24, 2012.
  17. ↑ "Discover Bank Mortgage Rates, Fees & Info". OriginationData.com.
  18. ↑ Kim, Hakyung; Wang, Christine (February 19, 2024). "Capital One to acquire Discover Financial Services in $35.3 billion all-stock deal". CNBC.
  19. ↑ Nerkar, Santul; Flitter, Emily (February 20, 2024). "What to Know About Capital One's Proposed Acquisition of Discover". The New York Times. ISSN 0362-4331.
  20. ↑ Son, Hugh (February 26, 2024). "Jamie Dimon on Capital One's $35.3 billion Discover acquisition: 'Let them compete'". CNBC.
  21. 1 2 Scarcella, Mike (July 23, 2024). "Capital One customers sue to block $35 billion Discover merger". Reuters.
  22. ↑ Stempel, Jonathan (October 28, 2024). Chang, Richard; Porter, Mark (eds.). "New York probing legality of Capital One-Discover merger". Reuters.
  23. ↑ Prentice, Chris; Azhar, Saeed (April 18, 2025). Nguyen, Lananh; Paul, Franklin; Lewis, Matthew (eds.). "Capital One, Discover deal approved by US bank regulators". Reuters.
  24. ↑ "Metro Business; Discover Is Sponsor For Year 2000 Event". The New York Times. June 18, 1998.
  25. ↑ "Back in Times Square, Toshiba Stands Tall". The New York Times. December 3, 2007.
  26. ↑ Daniels, Linda (March 6, 2000). "Discover Mills clears series of firsts for malls". American City Business Journals.
  27. ↑ Evans, Vanzetta (September 22, 2012). "Discover Mills to be Renamed Sugarloaf Mills". Patch Media.
  28. ↑ Klayman, Ben (November 8, 2010). McCormick, Gerald E. (ed.). "NHL signs U.S. sponsorship deal with Discover". Reuters.
  29. ↑ "Discover Card Float Among Big Winners In 2012 Rose Parade". CBS News. January 2, 2012.
  30. ↑ "Discover to sponsor Orange Bowl". ESPN. August 26, 2010.
  31. ↑ "Discover to sponsor Orange Bowl in 4-year deal". NBC News. Associated Press. August 26, 2010.
    • Historical business data for Discover Financial Services, Inc.:
    • SEC filings
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