Discover also has a large chunk of the credit market even though it is still below Visa or MasterCard as well as American Express. It has only been around since 1986, and it has changed ownership several times, but it has managed to stay in business, grow and gain acceptance.
The Discover card was first issued by Sears and Roebuck in 1986, according to the Go Banking Rates credit card website. Sears had recently purchased brokerage company Dean Witter Reynolds and real estate firm Coldwell Banker. It lumped them together with Discover under the name "Sears Financial Network" as it tried to create a presence in the financial services market.
Go Banking Rates cites several Discover card features that were unique at the time the card was first issued, although they have become common in the overall credit card industry. Discover cards never had an annual fee, and Sears tended to give consumers higher credit limits than competing cards. They also started a cash back rewards program, with customers earning money for using the card.
Sears stopped accepting competing credit cards at its stores once it began issuing the Discover card. Customers had to use Discover or a Sears store card to charge a purchase. According to Go Banking Rates, this caused them to lose business from people who wanted to use their Visa or MasterCard rather than opening a brand new account. Many competing retailers opted not to accept the card, and Visa and MasterCard forbade their issuing banks from also issuing Discover cards. They were sued for this anti-competitive measure and lost the case after it went to the Supreme Court.
Sears sold its financial businesses in the early 1990s, and Dean Witter Reynolds took over the Discover card. Reynolds was purchased by Morgan Stanley in 1997, and this new owner made Discover Financial Services into an independent company 10 years later. Discover purchased Diner's Club in 2008.
Discover reports there are more than 54 million Discover cardholders in the United States as of the end of 2009. This is considerably less than Visa, which had 270 million cardholders in the same period, or MasterCard, which had 203 million credit card customers. It processed 1.6 billion dollars in purchases through the close of 2009. Discover ranks second in overall credit card satisfaction, according to J. D. Powers and Associates, with American Express as number one.
- Go Banking Rates: History of Discover Card
- Credit Cards: Credit Card Statistics
- New York Times: Discover Card Buys Citigroup's Diners Club
- WalletHub. “List of Credit Card Companies, Card Networks & Major Cards [Source: Nilson Report].” Accessed June 10, 2020.
- Discover. “Welcome to Discover.” Accessed June 10, 2020.
- Discover. “Credit Cards.” Accessed June 10, 2020.
- J.D. Power. “Credit Card Rewards War Reaches Inflection Point as Competition Grows, J.D. Power Finds.” Accessed June 11, 2020.
- The Washington Post. “1986 Has Been a Boom Period for the Credit Card Industry.” Accessed June 10, 2020.
- Discover. “Discover Bank Ends Fees on All Deposit Products.” Accessed June 10, 2020.
- Mobile Payments Today. “Discover tops Mastercard, Visa as planet's most-accepted payment card.” Accessed June 10, 2020.
- Discover. “Form 10-K - For the year ended December 31, 2019,” Pages 1-23. Accessed June 10, 2020.
- Discover. “Checking Account.” Accessed June 10, 2020.
- Discover. “Online Banking.” Accessed June 10, 2020.
- Discover. “ATM Locator.” Accessed June 10, 2020.
- Discover. “Discover Launches Game-Changing New “It” Credit Card.” Accessed June 10, 2020.
- Discover. “Pricing Schedule.” Accessed June 10, 2020.
- Discover. “Credit Scorecard with your FICO® Score.” Accessed June 11, 2020.
- Discover. “Contact us anytime.” Accessed June 11, 2020.
- Discover. “The New 5% Calendar is here.” Accessed June 11, 2020.
Based in Kissimmee, Fla., Barb Nefer is a freelance writer with over 20 years of experience. She is a mental health counselor, finance coach and travel agency owner. Her work has appeared in such magazines as "The Writer" and "Grit" and she authored the book, "So You Want to Be a Counselor."