Summary
Discover's acquisition of the Diners Club global network could greatly improve Discover's merchant acceptance. However, there are major technical and operational hurdles involved in integrating the two networks.
Analysis
Is Discover’s Acquisition of the Diners Club Network a Good Thing? Discover recently closed on its acquisition of the Diners Club merchant network at a relative bargain basement price. Was this a wise move for Discover? It’s a question open for interpretation. On the pro side, it gives Discover global reach in new markets. Up to this point, Discover has largely been a North American card, issued only in the U.S. but also accepted to a limited degree in Mexico, Canada and the Caribbean. On the con side: Prior to selling Diner’s to Discover, previous owner Citibank converted its U.S. issues Diners Cards to MasterCard, shortly after losing a very lucrative U.S. government corporate card contract. Thus, Discover bought a railroad with relatively few trains. Additionally, there are very formidable technological and inter-operability issues. Bottom line: This transaction would have made much more sense a couple of years ago when there were still a significant number of Diner’s Club cards in existence in the U.S. As it stands now, Discover’s acquisition of the Diners network has limited utility.
