29 Mar 2022 By PAYCEC
Discover is a consumer credit card company known for its low fees and cash-back rewards program. Discover Financial offers its cards directly to its consumers, skipping intermediary bank issuers, and thereby earns interest on their credit card balances directly. Discover has an additional incentive, given its business model, to encourage its consumers to borrow more on their cards than on those of their competitors.
Discover Financial receives interest from its credit card consumers, as well as payment processing fees from merchants who accept the Discover card as payment. Visa, on the other hand, makes money from its payments network but not from the credit card balances of its customers. Discover's business model resembles that of American Express, which is also a direct issuer, in this sense.
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