Wednesday, August 22, 2012

eBay Inc(NASDAQ:EBAY) & Discover Financial Services(NYSE:DFS) Hit news Highs On New Pact

Shares of both eBay Inc(NASDAQ:EBAY) & Discover Financial Services(NYSE:DFS) made new highs on Wednesday after both companies announced a deal. Shares of EBAY closed higher by 2.51% to $47 and made a new 52-week high of $47. Shares of DFS also rose 3.86% to $38.43 with 52-week high of $39.14.

eBay Inc(NASDAQ:EBAY)’s PayPal has entered into a deal with Discover Financial Services(NYSE:DFS) that will it give access to millions of physical stores in the US. Payment cards will be given to more than 50 million users who can purchase from merchants who use Discover Network, which in turn has a database of 7 million + retail outlets.

PayPal, a wing of eBay is venturing into the offline world by tying up with retailers like Home Depot and Office Depot. PayPal payments will now be accepted in such stores. Ken Paterson, a director at Mercator Advisory Group, a research organization surveying consumer payments, says that the deal is a huge step for both companies. Discover will benefit from PayPal’s ever increasing network that will add to its daily transaction volume.

Get How These Companies Be Benefited From The Deal Here

PayPal executive, Don Kingsborough has stated that no updating of either hardware or software is required for using the cards issued to PayPal users. They can be used by swiping them on check-out machines along with a 4 digit PIN, which is a Discover Issuer Identification Number, or IIN, for identifying the cardholder. The IINs are being processed already.

Retailers will need to pay a transaction fee to PayPal when users pay with new cards. PayPal will also pay a certain amount to Discover for access to its database. The payment will be on per-transaction basis and the exact amount is not yet known. Discover is not used by too many retailers, because most prefer MasterCard or Visa. The collaboration with PayPal will increase its visibility to millions all over the world.

If this deal works out, then the combined service of PayPal and Discover might be available outside US too. Kingsborough has said that the deal will most probably not be extended to MasterCard and Visa as the agreement is one of a kind.

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