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Discover Financial Partners Windcave, Expands in New Zealand

Zacks Equity Research

Discover Global Network, the payments brand of Discover Financial Services DFS, has  partnered with Windcave, a payment technology company.

Per the agreement, Windcave is now a global acquirer for all cards that run on the Discover Global Network.

Windcave’s extensive merchant network will be available to Discover Global Network cardholders at thousands of point of sale locations and ecommerce merchants in New Zealand. Windcave will add to Discover Global Network’s more than 44 million merchant acceptance locations around the world.

Discover Financial is eyeing New Zealand given that the market holds significant growth potential.  In 2018, the region saw more than 352,000 inbound tourists from the United States as well has high traveler numbers from Australia, China, India and Japan.

The use of debit, credit as well as charge cards is widespread in New Zealand, with most garages, hotels, restaurants and even small shops accepting them. American Express Co. AXP, Mastercard Inc. MA and Visa Inc. V cards are also accepted in the region.

Discover Global Network falls under the company’s Payment Services business and includes Discover, Diners Club International, PULSE and affiliated networks. The company has agreements with a number of financial institutions, networks and commercial service providers for issuance of products or processing of payments.

Discover Global Network has relationships with partners around the globe in Brazil, China, India, Japan, the Middle East, Nigeria, Puerto Rico, Serbia, South Korea, Vietnam, Taiwan, Mexico and throughout Europe.

Discover Financial  is on a constant move to expand its payments network. Recently, Discover Global Network signed an agreement with Sage, a market leader in cloud business management solutions that provides cardholders more options to pay at key hospitality and retail merchants throughout the UK and Ireland.

Regular tie-ups and agreements to expand the company’s network are imperative to maintain its market share in a very competitive payments space. Its Diners Club faces stiff competition from American Express as both cards target international business travelers.

Year to date, the stock has gained 33.2% compared with the industry's growth of 11.8%.

As the payments industry continues to evolve, the company is facing increasing competition from financial technology firms,  which leverage new technologies to create innovative payment solutions. This can adversely impact its costs, transaction volume and ability to grow business.

Expansion of the company’s Discover Global Network has led to an increase in payment services transaction volumes over the years.  The same was up 15% in 2018 and 12% in 2017.

We believe that Discover Financial’s payments segment will continue to drive volume growth in a competitive environment. The company continues to leverage its network to support its card-issuing business.

Discover Financial carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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