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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