Department 56 (NYSE:DFS)
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5 Years : From Apr 2012 to Apr 2017
Discover Financial Services (DFS), the sixth-largest U.S. credit card issuer by spending, is expanding its geographic footprint with a deal that will allow its cards to be issued outside the U.S. for the first time.
The Riverwoods, Ill.-based company said Wednesday it expanded a franchise agreement with Diners Club Ecuador to include the issuance of Discover cards in Ecuador. Diners Club Ecuador will work with Banco Pichincha to issue the cards.
The deal gives Discover a "tremendous opportunity to build its brand globally," Diane Offereins, executive vice president and president of payment services for Discover, said in a statement.
The cards will be processed on the Diners Club network, which Discover acquired in 2008 from Citigroup Inc. (C). The network is accepted by 100% of merchants in Ecuador, Discover said.
Initially, Diners Club Ecuador will issue a basic version of Discover's cash rewards card but will roll out additional products over time.
Discover, like American Express Co. (AXP), issues credit cards and processes transactions, unlike competing payment networks Visa Inc. (V) and MasterCard Inc. (MA), which process transactions but rely on partner banks to issue their cards.
Discover has a smaller acceptance footprint outside the U.S. than competing networks but has been trying to take advantage of new growth markets. Last week the company said it struck a deal with National Payments Corporation of India that will allow its cardholders to withdraw cash from ATMs and make purchases at merchants in India. It will also process transactions made by cards on India's RuPay payment network.
Discover was the sixth largest credit-card issuer in the U.S. last year based on purchase volume, which was more than $100 billion, according to Nilson Report, a payments-industry newsletter.
Discover's shares were up 0.3% at $32.10 in pre-market trading.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214; email@example.com