Profile: Discover Financial Services (DFS.N)

DFS.N on New York Stock Exchange

24 Dec 2014
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Discover Financial Services, incorporated on July 25, 1960, is a direct banking and payment services company. The Company is a bank holding company and a financial holding company. The Company offer credit cards, student loans, personal loans and deposit products through its Discover Bank subsidiary and home loans through its Discover Home Loans, Inc. subsidiary (Discover Home Loans). The Company operates the Discover Network, its credit card payments network; the PULSE network (PULSE), its automated teller machine (ATM), debit and electronic funds transfer network, and Diners Club International (Diners Club), its global payments network. The Company operates in two segments: Direct Banking and Payment Services. In June 2012, Tree.Com Inc sold the operating assets of its Home Loan Center, Inc. business to a wholly owned subsidiary of Discover Financial Services.

Direct Banking

The Company offers credit cards to consumers and small businesses. The Company’s credit card customers are permitted to revolve their balances and repay their obligations over a period of time and at an interest rate set forth in their cardmember agreements, which may be either fixed or variable. The interest that the Company earns on revolving credit card balances makes up approximately 86% of its total interest income. The Company also charges customers other fees, including fees for late payments, balance transfer transactions and cash advance transactions.

The Company’s personal loans are unsecured loans with fixed interest rates, terms and payments. The Company generally market personal loans to its existing credit card customers through direct mail, statement inserts and email. The Company also market personal loans to non-Discover customers through direct mail. Customers can submit applications through phone, online or through the mail, and can service their accounts online or by phone. The Company offer home mortgage loans and related services to help consumers finance home purchases and refinance existing home mortgages. The Company offer prime variable, fixed-rate conventional, and Federal Housing Administration (FHA) loans to qualified applicants. The Company also market home loans to non-Discover customers through Internet advertising, including search engine marketing, display banners, Internet lead aggregators, rate tables on financial websites, and social media.

The Company obtains deposits from consumers directly or through affinity relationships (direct-to-consumer deposits) and through third-party securities brokerage firms that offer its deposits to their customers (brokered deposits). The Company’s deposit products include certificates of deposit, money market accounts, savings accounts and Individual Retirement Account (IRA) certificates of deposit. The Company markets its direct-to-consumer deposit products to its existing customer base and other prospective customers through the use of its Website, print materials, affinity arrangements with third parties and Internet advertising.

Payment Services

The Company’s PULSE network is the ATM/debit networks. PULSE links cardholders of approximately 6,100 financial institutions with ATMs and point-of-sale (POS) terminals located throughout the United States. This includes more than 4,100 financial institutions with which PULSE has direct relationships and approximately 2,000 additional financial institutions through agreements PULSE has with other debit networks. PULSE also provides cash access at more than 850,000 ATMs. PULSE's primary source of revenue is transaction fees charged for switching and settling ATM, personal identification number (PIN) POS debit and signature debit transactions initiated through the use of debit cards issued by participating financial institutions. In addition, PULSE offers a range of optional products and services that produce income for the network, including signature debit transaction processing, debit card fraud detection and risk mitigation services, and connections to other regional and national electronic funds transfer networks.

The Company’s Diners Club business maintains an acceptance network in over 185 countries and territories through its relationships with over 80 licensees, which are generally financial institutions. The Company also earns revenue from providing various support services to its Diners Club licensees, including processing and settlement of cross border transactions. The Company also provides a centralized service center and Internet services to its licensees. The Company has agreements related to issuing credit, debit and prepaid cards with a number of other financial institutions or networks for issuance of card products on the Discover Network. The Company refers to these financial institutions as network partners (formerly third-party issuers).

The Company competes with American Express, Bank of America, Capital One, JPMorgan Chase, Citi, Sallie Mae, Nationwide, Wells Fargo, USAA, Ally Financial, American Express, Visa, MasterCard, Visa's Interlink, MasterCard's Maestro and First Data's STAR.

Company Address

Discover Financial Services

2500 Lake Cook Road
P: +1224.4050900
F: +1302.6555049

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