Discover to offer non-card payments

Through a partnership with fintech Buy It Mobility Networks Inc. (BIM), Discover will let merchants accept payments directly from consumers’ bank accounts. The feature is popular in Asian markets.

Why should we care?
The announcement suggests that Discover is eager to claim a bigger chunk of the U.S. payments market, and is willing to forego income from card-processing fees to scale aggressively. Discover only processes 2% of card transactions in the U.S., as compared to Visa’s 65%. The payments alternative will give “Discover another arrow in the quiver,” said Jason Hanson, Discover’s Senior Vice President of Global Business Development. As an ACH payment, this feature will let merchants pay lower fees than they do for transactions through credit cards, which may make Discover a favored partner for businesses. BIM says its technology helps retailers improve customer retention, especially if they offer lower prices to consumers who pay through ACH rails, citing an average of $1,700 in additional revenue per active user. But BIM says many companies have been reticent to adopt its technology due to the onboarding involved; integrating with Discover’s existing payments network will render that hesitation a moot concern. Regardless, adoption among consumers isn’t fully guaranteed. It remains to be seen whether direct payments become as popular as they do on the other side of the Pacific. If it takes off, Discover may grow significantly and become a bigger thorn in Visa’s side.