Published January 13, 2015
In the latest challenge to the Visa and MasterCard dominance of the American credit card market, Discover Financial Services Inc. (search) announced on Friday that it is teaming up with Wal-Mart (WMT) to issue a new credit card to customers of the world's largest retailer.
It is Discover's first major card deal since the U.S. Supreme Court last October let stand an antitrust ruling that forced Visa and MasterCard to stop preventing their member banks from issuing rival cards. That made it possible for Discover and the American Express Co. (AXP) to begin seeking American partners to issue their cards.
New York-based American Express last year announced its first deals, with specialty card issuer MBNA Corp. and Citibank, a unit of Citigroup Inc. (C).
Discover, a unit of New York-based investment bank Morgan Stanley (MDW), said its new cards — to be called Wal-Mart Discover — will be issued by GE Consumer Finance, which is a unit of the General Electric Co. (GE).
Transactions on the cards will be cleared on the Discover network. GE Consumer Finance provides credit cards and services to retailers and auto dealers around the world.
The new Wal-Mart card will have no annual fee, the companies said. It will be usable both inside and outside the discount retailer's stores, and customers will be eligible for up to 1 percent cash back on all purchases.
"It's a very exciting day for us," said David W. Nelms, chairman and chief executive officer of Discover Financial Services.
He pointed out that the new card "means consumers will have more choices" in the credit field. For Wal-Mart Stores Inc. and other merchants, "it helps create volume, and that lowers costs ... and improves efficiency."
GE Consumer Finance has issued hundreds of millions of private-label cards for retailers, and Nelms said "we would hope to talk to GE about extending this kind of relationship to other partners over time."
Nelms said that Discover also was "seeking to partner with lots of financial institutions," including banks.
GE Consumer Finance also issues Wal-Mart's private label credit card.
Friday's announcement marked Discover's second major deal since the Visa-MasterCard case ended.
In mid-November, Discover announced that it was merging with the PULSE ETF Association card processing network in a deal valued at $311 million. PULSE services debit and ATM transactions for more than 4,000 banks, credit unions and savings institutions.
Discover has more than 50 million of its own cards outstanding and has some 4 million merchants linked to its network.
https://www.foxnews.com/story/discover-card-wal-mart-in-new-card-deal