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Discover Financial Partners with PayPal for Digital Payment

Zacks Equity Research

Discover Financial Services DFS has inked a partnership deal with PayPal Holdings, Inc. PYPL, which will make PayPal “more widely available” to Discover card members, acquirers and merchants.

The Strategic Agreement

The partnership offers PayPal with access to Discover’s tokenization services. This will aid the U.S. PayPal customers in making payments though their Discover cards at the contactless-enabled merchants that accept Discover.

Notably, Discover cards will be presented as a payment option within the PayPal wallet. The deal also enables Discover card members to use their Cashback Bonus at checkout.

Diane Offereins – President of Payment Services at Discover – noted, “This agreement with PayPal helps expand consumer payment choices by providing additional ways to transact, and builds on the growing adoption of digital payments.”

Bill Ready, Chief Operating Officer of PayPal noted, “The agreement with Discover leverages each company’s core assets, will add value to everyday spending, and deliver great customer experiences”. Ready further added, “Discover has been a long-term strategic partner for PayPal, and we expect that collaborative relationship to continue as we work to offer our joint customers more choice and increased value online, in app and in store.

Bottom Line

PayPal’s latest deal is almost like those it entered with Visa Inc. V and MasterCard Inc. MA last year as the San Jose, CA-based online-payments provider strives toward making itself a universally accepted payment tool. For Discover Financial, this collaboration should generate transaction volume growth.

Stock Performance

Discover Financial’s shares surged 40.5% in a year’s time, outperforming the 30% gain for the Zacks categorized Consumer Loan industry. The company remains well positioned for growth on the back of its robust credit card business. The U.S. consumer finance industry remains healthy amid a declining unemployment and improving housing sector. The rising rate environment creates optimism, going ahead.

Currently, Discover Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Discover Financial Services (DFS): Free Stock Analysis Report
Mastercard Incorporated (MA): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
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