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Discover

Discover is the smallest of the four major US card networks (Visa, Mastercard, Amex, Discover). Like Amex, Discover is a closed-loop network - they issue cards and handle acquiring. Market share is low but acceptance is expected in the US.

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What Discover Actually Does​

Discover is:

  • A closed-loop network (like Amex)
  • A card issuer (issues Discover-branded cards)
  • Sometimes an acquirer (Discover Global Network)
  • The rule-maker for Discover cards

Market share:

  • US: ~7-10% of card transactions
  • International: Minimal (partnerships with Diners Club, JCB)

Acceptance: Expected in US, rare internationally.

Discover vs Visa/Mastercard/Amex​

FactorDiscoverVisa/MastercardAmex
Network typeClosed-loopOpen-loopClosed-loop
Market share (US)7-10%75% combined15-20%
InternationalLowHighMedium
PricingSimilar to Visa/MCBaselineHigher
Monitoring programsLess formalVery formalModerate

For merchants: Discover is like Amex (closed-loop) but with lower volume and fees similar to Visa/MC.

Discover Rules That Matter to Merchants​

1. Dispute Monitoring​

Discover doesn't publish formal monitoring programs like Visa's VAMP or Mastercard's ECM:

  • Internal monitoring (not public thresholds)
  • Typically tolerates 1-1.5% ratio
  • Lower volume = less strict enforcement

Reality: Discover is small enough that they handle merchants case-by-case rather than automated programs.

2. Reason Code Format​

Discover uses letter-number codes:

CodeCategoryDescription
UA02FraudFraud - full recourse
RGNon-receiptGoods/services not received
AADoes not recognizeCardholder doesn't recognize charge
APCancelled recurringSubscription/recurring cancelled

Similar to Amex's letter-number format, not Visa's 10.4 or Mastercard's 4837.

Full breakdown: Discover Reason Codes

3. Response Timeframes​

ActionTimeframe
Representment response20-30 days (varies by code)
Pre-arbitrationNot applicable (no pre-arb stage)
ArbitrationDiscover decides (closed-loop)

Similar to Amex: Shorter windows than Visa/Mastercard.

Discover Network Fees​

Discover fees are competitive with Visa/Mastercard:

Fee TypeRateNotes
Assessment0.13%All Discover transactions
Network authorization$0.0195Per transaction
Data usage fee$0.0045Per transaction

Total network fees: ~0.14-0.16% (same as Visa/MC)

Interchange: Discover's interchange rates are similar to Visa/Mastercard.

Why Merchants Accept Discover​

Despite low volume (7-10%), merchants accept Discover because:

1. US Customer Expectation

  • Not accepting Discover looks incomplete
  • Customers expect all four networks
  • Professional credibility

2. Easy Through OptBlue Equivalent

  • Stripe, Square, most processors include Discover
  • No separate contract needed
  • Same pricing as Visa/MC usually

3. Similar Fees to Visa/MC

  • Not more expensive like Amex
  • Interchange and assessment similar
  • No premium pricing

4. Low Effort

  • If your processor supports Visa/MC, Discover is already enabled
  • Zero additional integration

When to Skip Discover​

Consider not accepting Discover if:

  • You're international-only (Discover has no global presence)
  • Your processor charges premium rates for Discover
  • Compliance costs outweigh 7% of revenue

Reality: Most processors include Discover automatically. You're probably already accepting it without realizing.

Check your statements: Look for "Discover" transactions. If you have any, you're accepting it.

Common Discover Gotchas​

1. Low Volume = Less Practice​

Problem: Discover is only 7-10% of transactions

  • You get fewer Discover disputes
  • Less practice responding
  • Easy to forget Discover has different codes/rules

Reality: When you get a Discover dispute, you have to remember their specific process.

2. Closed-Loop Bias​

Like Amex, Discover IS the issuer:

  • They're protecting their own cardholders
  • Less neutral than Visa/MC
  • Win rates may be lower

Estimate: 30-40% win rate (vs 40-50% for Visa/MC)

3. Shorter Response Windows​

20-30 days flies by faster than you think:

  • Receive dispute Friday
  • Weekend = 2 days gone
  • Holiday week = another 5 days gone
  • You have 13 days left

Set calendar reminders immediately when you receive Discover disputes.

4. Less Documentation​

Discover's process is less documented than Visa/MC:

  • Fewer online resources
  • Your processor may not have Discover expertise
  • Community knowledge is limited

You're on your own more with Discover disputes.

Test to Run​

Discover acceptance audit:

Week 1: Volume check

  1. Pull last 3 months of transactions
  2. Calculate Discover %: Discover transactions / Total = ____%
  3. Typical: 5-10%

Week 2: Profitability check 4. Calculate Discover fees paid 5. Compare to Visa/MC fees (should be similar) 6. If Discover fees are 20%+ higher, investigate why

Week 3: Dispute check 7. Pull Discover disputes from last year 8. How many? (Expect: very few due to low volume) 9. Win rate: ____%

Success criteria: Discover is 5-10% of volume, fees match Visa/MC, minimal disputes.

Scale Callouts​

All volume tiers:

  • Discover is 7-10% regardless of scale
  • Fees are similar to Visa/MC
  • Accept it unless you have specific reason not to

Exception: International-only businesses

  • Discover has no international presence
  • 0% of non-US customers have Discover
  • Can skip if 100% international

Where This Breaks​

  1. International sales: Discover is US-only effectively. Partnerships with Diners Club and JCB exist but are rare.

  2. Low-volume means low expertise: Your processor's support team may not know Discover rules well. You're troubleshooting on your own.

  3. Closed-loop bias: Discover sides with cardholders (their own customers). Evidence requirements are same as Visa/MC but win rates are lower.

  4. No formal monitoring = unpredictable: Visa/MC have published 0.9-1.0% thresholds. Discover doesn't publish. You don't know where you stand.

  5. Bundled with other processors: Some processors automatically include Discover. You may be accepting it without realizing.

Next Steps​

Understanding Discover?

  1. Discover Reason Codes - All Discover codes
  2. Compelling Evidence - Evidence works same as Visa/MC
  3. Representment - Response process

Comparing networks?

  1. Visa - Largest network, strictest monitoring
  2. Mastercard - Second largest, higher thresholds
  3. American Express - Premium cards, closed-loop
  4. Card Networks Overview - All four compared

Managing disputes across networks?

  1. Chargeback Monitoring - All network programs
  2. Reason Code Reference - All network codes
  3. Time Frames - Response deadlines by network

See Also​