How Discover Network is Tackling Global Acceptance
A credit card is only as good as the number of places that it’s accepted. Major card networks face the challenge of increasing global acceptance, since the ubiquity of acceptance is the cornerstone of consumer credit card adoption, and, to a certain extent, brand loyalty.
We’re taking an inside look at Discover Network and their efforts at increasing global acceptance in 2014 and beyond.
According to Gerry Wagner, VP of Global Acceptance at Discover Network, the most important questions to ask when figuring out which regions to target are, “where do our cardholders travel to and where do they spend?”
Targeting these areas takes one of three approaches: white-labeling the Discover Network (such as the partnership with China’s UnionPay), acceptance deals with local acquirers, and franchising the network through Diners Club International.
It’s this three-pronged approach that has resulted in a 68 percent increase in Discover Network’s payment volume since 2007 and over 30 million acceptance locations around the world.
Markets making strides
Discover Network has concentrated on the U.K., France, Germany, Australia, Canada, and China, and 2015 will bring a continued focus on these countries.
France was one country that did not meet acceptance expectations, but part of being a global payments network is tailoring the strategy to meet the needs of the market.
In total, Discover Network has signed around 75 different acceptance agreements for the year, according to Wagner. “Some are with merchants specifically, and a marketing program around acceptance, and 33 were with new partners,” he said.
There’s much talk about China, and Discover Network has seen “explosive growth” there thanks to a network-to-network agreement with China’s UnionPay.
“We’ve got wider acceptance there than Visa and MasterCard and we are the largest acceptance network in Asia. UnionPay looks at Visa and MasterCard as direct competitors; with us they found a partner [thanks to the white-label solution].”
“Our goal is to be the best partner in the payments business,” he explained.
The cost of global acceptance
The cost of doing business for a company with as large a footprint as Discover Network is “growing exponentially,” especially around compliance, according to Wagner.
“Here in the United States, we’ve experienced more oversight and compliance, and as a result of that, we’ve had to invest more in that area to make sure we’re all doing the right thing and that we have continued confidence in the payments system.”
There’s also a significant cost to developing technologies at both the software and hardware levels.
“We’ve invested a ton of money and understand it takes that investment to become a global payments network,” Wagner said.
One thing that will remain the same is that the U.S. will continue to be seen as a leader in payments innovation.
“I’m amazed at how many people around the world look to the U.S. for leadership and innovation,” Wagner said.
As for the rise of Apple Pay and new payment technologies that have captured consumer interest, “it’s going to take a while for these handsets to be properly positioned and usable at merchant locations. I think we’re going to see the reterminalization of America in the next few years.”
Of course, success in payments hinges on consumer adoption. 2015 will be a year of new challenges with the rise of mobile, the EMV upgrade, and increasing competition and industry fragmentation.