Discover cards are widely accepted along with Visa, Mastercard, and American Express, and they consistently top consumer satisfaction surveys.
Definition and Example of Discover Cards
Discover Financial Services includes a digital banking segment and the processing network segment (Discover Network). “Discover card” refers to one of several consumer credit cards issued by Discover Bank, the digital banking segment. Discover cardholders can use their cards to make purchases and pay the balance off over time with interest. Discover cards’ stated consumer advantages include cash-back rewards, no annual fee, and a positive customer experience. Discover cards include cards for consumers, students, and a secured credit card. The issuer offers a cash-back credit card and miles-earning travel credit card. Each features the Discover logo with an orange letter “O.”
How Discover Cards Work
Discover is both the credit card issuer and payment processing network for its consumer credit cards. As a card issuer, Discover determines the acceptable credit risk for its credit cards. It is responsible for marketing card products, approving new credit card applications, and providing customer assistance.
Card Acceptance
Discover card acceptance (or lack thereof) is a frequent misconception, the issuer notes. Discover cards are accepted at 99% of U.S. businesses. Discover cards are accepted where the Discover Global Network is active; the Discover network includes Discover Network, Diners Club International (DCI), PULSE debit network, and other partners. Globally, Discover cards are accepted at 61 million businesses, according to the Nilson Report. This is significantly less than Visa and Mastercard, each accepted at 80 million businesses. American Express falls just behind Discover with 60 million businesses accepting payments. Discover cards are widely accepted in most countries in North America, South America, Europe, and Australia. They may only be accepted in some countries in Africa and Asia.
Payment Processing
Discover provides the technology to facilitate transactions made on its cards, and Discover card transactions in the U.S. can be streamlined if the merchant has a relationship with Discover: If the merchant doesn’t have a relationship with Discover, a bank acquirer or processor acts as a middleman between Discover and the merchant.
Discover Card Benefits
Cardholders benefits for Discover cards are fairly standard among issuers:
Types of Discover Cards
Discover issues four types of credit cards, each with rewards and with no annual fee.
Cash Back
The cash-back credit card offers up to 5% cash-back rewards on purchases. Consumers qualify for the card based on their credit history and income.
Student
Discover’s student credit card is available for college students to help build their credit history.
Secured
Discover’s secured credit card allows consumers to establish or rebuild their credit. Consumers make a security deposit to guarantee the balance. It’s also one of the few secured credit cards that offers cash back on purchases. With responsible use, cardholders may be able to upgrade their card to an unsecured account.
Travel
Purchases on the Discover travel card earn miles that customers can redeem for a statement credit against travel purchases or for cash back. While mile earnings and redemption are pretty straightforward, Discover’s travel card lacks common perks offered by a few other annual-fee-free travel cards, like travel accident insurance, car rental damage waiver, or an extended warranty. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
