After spending years seeing its signature debit products summarily trounced by rivals Visa and MasterCard, Discover is raising the level of its game by dropping its prices.
Specifically, Discover has struck a deal with the American Bankers Association that will provide the trade group’s approximately 4,000 member banks access to discounted pricing.
“Financial institutions are somewhat skeptical of change,” Steve Sievert, executive vice president of marketing and communications in Discover’s Pulse unit, said in an interview, reports American Banker. “We’ve got to deliver something better to encourage banks to change.”
Discover will have to overcome a strong advantage by Visa and MasterCard. Visa reported debit card volume of $432 billion in the second quarter, while MasterCard’s comparable figure clocked in at $177 billion. Discover’s Pulse Network, on the other hand, reported $42 billion in debit card volume during Q2 2014.
Apart from lower prices, Discover is also attempting to bait card issuers by allowing banks to place the Discover logo on the back of the card, and reserve the prime real estate up front for their own logo.
Although Discover is lagging sharply in its signature debit program, its PIN debit network is performing more strongly. Discover Pulse network held 18 percent of the PIN market, as compared to MasterCard’s 20 percent and Visa’s 35 percent.