Discover Financial Services is getting into the person-to-person payments game with PayPal Inc. following the recent rollout of competing services from Visa Inc. and American Express Co.
Discover later this month plans to release Money Messenger, a service based on PayPal technology that lets the Riverwoods, Ill., company's cardholders send money to anyone, including non-cardholders.
Payments will show up as normal card transactions in a customer's account and allow a cardholder to earn cash back rewards like they would on other purchases.
A Discover spokeswoman said on Wednesday that an executive was not available to discuss the service but in emailed responses to questions wrote that Money Messenger would give cardholders "another way to help them earn rewards" and allow them to "consolidate and track more of their spending on one payment vehicle."
The service is the latest example of how PayPal is trying to work more closely with traditional financial services companies, many of which view the eBay Inc. subsidiary in San Jose, Calif., as a rival, Dan Schatt, the general manager of financial innovations at PayPal, said in an interview this week at Nacha's annual conference in Austin, Texas.
"It's going to basically give Discover, and any card network and any card issuer that's interested in doing the same thing, the opportunity to break into the cash market and check market in a major way," Schatt said.
Discover does not plan to charge customers for the service, which it first announced in October. Discover cardholders will access the service on the issuer's website as well as its mobile browser site and applications for iPhone, Android and BlackBerry smartphones.
To send money, a cardholder would need the recipient's email address or phone number.
The service is branded by Discover but includes a "Powered by PayPal" logo, according to a video demo that Schatt played.
Recipients would have to set up a PayPal account to access funds if they do not have one already.
The service could eventually help Discover expand acceptance of its cards, said Zilvinas Bareisis, a senior analyst in London with the research firm Celent. The "additional brand exposure" will "probably be meaningful over the course of time," Bareisis said.
Money Messenger joins a growing list of P-to-P services from credit card companies.
American Express in March announced Serve, a digital wallet that allows users to register multiple cards, including non-Amex ones, for funding transactions. It can be used to pay for point of sale transactions and make P-to-P payments.
Visa also announced last month a service that lets one cardholder transfer money to another cardholder. This service can be accessed through issuers as well as Fiserv Inc. and CashEdge Inc., which offer P-to-P payment platforms.
MasterCard Inc. also offers a P-to-P service called MoneySend through its issuing banks based on technology from software vendor Obopay Inc.
