Direct banking and payment services company, Discover Financial Services (DFS), has entered into a strategic alliance with Smartlink Card Service JSC. Vietnam-based Smartlink is a well known domestic payments network in that country.
Pursuant to the agreement, cardholders of two out of three operating networks of Discover Financial namely The Discover Network and Diners Club International (DCI) will be able to access more than 16,000 ATMs in Vietnam. A network of local commercial banks will support this cardholder benefit.
As consumers will be able to use their cards at more cash access points, this partnership should help Discover Financial attract the technology-friendly crowd toward its products, thereby boosting Discover Financial’s client base. This should boost the transaction volume of Discover Financial on the international domestic payment network, and consequently revenues of both the direct banking and payments services segments of the company.
Smartlink processes transactions connected to 51 banks and financial institutions, and supports 55 million local debit cards in the Vietnamese market. Discover Financial aims to utilize Smartlink’s network to promote card-payment market development in Vietnam and allow Vietnamese banks to use Discover’s payment products.
The aforementioned transaction fits in with Discover Financial’s global expansion strategy of supporting growth of local leading international networks. Vietnam, being an emerging economy, provides payment processors with immense growth opportunities in the card-payment market. Discover Financial’s presence in Vietnam will allow it to tap this opportunity and increase its global client base.
Discover Financial is working hard to establish a foothold in the international card market to enhance its global client base. The company added significant international networks to its existing Discover network since the acquisition of the Diners Club in 2008. The Aug 2013 Paydiant agreement and the May 2013 initiative with Ariba aimed at transforming B2B payments by eliminating paper transactions were undertaken with the same objective. These alliances should bolster the global client base of the company as these networks combine the world’s leading web-based trading communities with industry-leading cloud-based applications.
Discover Financial currently carries a Zacks Rank #2 (Buy). Other financial services companies like Encore Capital Group, Inc. (ECPG), The Hartford Financial Services Group, Inc. (HIG) and First Cash Financial Services Inc. (FCFS) with the same Zacks Rank #2 are also worth considering.