In the span of a week, Discover Financial Services LLC revealed that it had formed three separate partnerships that will help the company launch a major expansion in the payments marketplace.
Until now, merchants who chose to accept Discover credit cards were required to manage a processing system that was entirely separate from the integrated operation for processing Visa U.S.A. and MasterCard Worldwide purchases. While it didn't require any extra equipment, it did mean more paperwork.
With the new partnerships between Discover and Chase Paymentech Solutions LLC, Wells Fargo & Co. and United Payment Services, that will all be a thing of the past.
"Previously, [acquirers] provided Visa and MasterCard processing services for merchants, and Discover Network provided separate processing services for Discover Network cards. While a merchant's POS terminal is utilized to accept electronic payments of all card brands, all downstream processing of those transactions was separate," said Matt Johanson, Vice President of Acquirer Relations for Discover Network.
"Merchants received multiple statements, multiple settlements into their bank accounts, utilized separate customer service numbers, etc. Now, acquirers like Chase will be able to provide an integrated, all-in-one processing package for Discover Network, Visa and MasterCard transactions," Johanson said.
For Discover, it means locations where their card is accepted will grow rapidly, not only because of the expansive merchant customer base of Chase and Wells Fargo, but because of the integrated, streamlined processing.
The partnership will make it possible for small and mid-sized businesses to accept Discover cards without the additional headaches of separate systems.
Will merchants now be required to accept Discover Network cards? "Merchants never 'have' to accept a card brand," Johanson said.
"We do believe that one barrier to acceptance was the separate processing. Small- and mid-sized merchants want and need to concentrate on their business, not balancing their payments processing statements and bank accounts. That's why we believe this integrated offering will be so attractive to this market."
With the addition of UPS as an approved full-service acquirer, their agents will also be able to receive residuals from their merchants' Discover processing.
UPS will have full responsibility for pricing, processing, settlement, risk management and customer service for Discover Network merchant accounts it maintains.
Full integration is under way at UPS, with the rollout scheduled for November. At Chase, integration has already been implemented into the merchant boarding process with the expectation for a rollout of the full processing package to its existing merchant customers starting in early 2008.
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