Discover Raises International Profile with Purchase of Diners Club
Discover Financial Services announced today its purchase of the Diners Club credit card brand from Citigroup for $165 million. The move will help Discover expand its footprint outside of the United States, where it has struggled to make headway and compete on an equal footing with the likes of Visa, MasterCard and American Express. Citigroup, for its part, raises some cash as it continues its attempt to right the ship after being stung in the subprime debacle.
Diners Club is accepted at over 8 million merchants in 185 countries, so Discover’s network instantly becomes international with the acquisition. While Discover says it will take two to three years to fully integrate Diners Club, in the end Discover credit cards will be accepted at all locations that accept Diners Club, and vice versa.
While it has sold the Diners Club brand, Citi will still issue Diners Club cards as a partner with Discover. Over the last few years, Discover has expanded from being simply a card issuer to being a “network” that processes payments in the same way that Visa and MasterCard do. The Diners Club acquisition allows Discover to broaden its processing network, but Discover will not be the issuer of new Diners Club cards. If that’s confusing, think of how natural the words Citi MasterCard sound, then think of Citi Diners Club Card in the same manner. Citi issues the card, Diners Club/Discover owns the processing network.
Discover’s purchase of Diners Club International is expected to close within 90 days.
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