Discover financial services

Discover Financial Services (NYSE: DFS) is a credit card company that issues its own cards and processes customer transactions.

Company Description

Discover has a similar business model to competitor American Express. Both of these firms issue their own cards and earn a small fee, called the discount rate, from the merchant every time the card is used. Discover, like AmEx, bears the burden of credit risk if its cardholders are unable to pay off the balances they rack up using their card. This is a different business model than competitors Mastercard and Visa who simply process transactions and shift the credit risk to the card issuing banks.

Discover was founded in 1986 and spun out of Morgan Stanley ((NYSE: MS) in 2007 with its shares trading on the New York Stock Exchange.

Related Terms

• Blue chip
• Large cap
• Stalwart

Related Companies

• American Express
• Berkshire Hathaway
• Mastercard
• Visa

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