What is Discover?

Founded in the high-living, credit-fuelled 1980s, Discover (with backing from its founder Sears, and later Morgan Stanley) grew rapidly to become the third largest payment processor, by cards in circulation, in the United States.

More recently, thanks in large part to a partnership with China UnionPay, Discover has become the most widely accepted payment card in the world. Nevertheless, despite its unrivalled reach, Discover is still relatively unheard of in the UK.


Times Square Discover advert

History of Discover Cards

In the early 1980s, Sears (which started as a Chicago-based mail-order catalogue business) had grown to become the largest retailer in the United States. As retail growth plateaued, Sears sought to diversify its operations and leverage its preeminent position in retail.

Following a launch announcement the previous year, Sears started issuing Discover cards in 1986. The combined benefits of 'no annual fee', high credit limits and exclusivity, as Sears only accepted payment cards, meant it was an instant US success.

However, although its association with Sears was a benefit, it also caused development issues. Rival retailers were understandably reluctant to accept the card, for fear they would compromise sensitive transactional data. Equally, rival payment platforms (like MasterCard and Visa) prevented banks from offering Discover card products, with strict exclusivity clauses included with their contracts.

As the 80s gave way to the 90s, Sears dominance of US retail declined. Walmart and other hypermarket-style stores used bulk purchasing to drive down prices with suppliers. These discounts, combined with spacious of out-of-town locations, proved a winning formula, and by 1990 Sears had lost its crown as the biggest retailer in the US. These challenges to its core business meant that Sears was fighting for every dollar spent. Declining business from people without a Discover card was no longer an option (something Marks & Spencer, with the M&S card, also learnt in the UK). In 1993, Sears bowed to demand and started accepting other payment cards, selling it's Discover card operation at around the same time.

New owners Dean Witter and Morgan Stanley (following a merger), sought to aggressively grow the business (which was no longer encumbered by its association with Sears), with prominent advertising campaigns. Discovers' hand was strengthened further when the US Supreme Court ruled that clauses precluding banks from issuing Discover cards alongside other payment brands violated US antitrust laws, designed to promote fair competition and for the benefit of consumers.


Which UK issuers offer Discover cards?

Although partnerships with other payment processors currently offer Discover card users better international payment coverage than any other brand , their direct coverage in the UK practically nonexistent. As such, there is little appeal for UK issuers in offering Discover brand cards, and none do.


Where can Discover cards be used in the UK?

Despite lacking a local UK presence, global Discover card users are well served in the UK.

A partnership with the Link ATM network enables Discover cardholders to withdraw cash in around 60,000 places throughout England, Northern Ireland, Scotland and Wales.

Discover cards are also accepted wherever Diners Club cards can be used. Diners Club itself is not as widely accepted as MasterCard and Visa (or even American Express), but cardholders can still use their cards to make purchases with leading UK retailers, like Tesco and Sainsbury's, British Rail and most petrol stations.

 


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