Discover Expands Network Reach with Indian Network Deal

Discover Financial Services has signed a deal with the National Payments Corporation of India, in the credit card company's latest effort to increase card acceptance abroad by teaming up with local networks.

Under the new alliance, announced Wednesday, Discover and Diners Club International cards will be accepted at NPCI ATMs and point-of-sale terminals. In addition, people whose cards are processed by RuPay, the national payment network in India, will be able to make purchases outside of the country using Discover or its Diners Club and Pulse networks.

"It's kind of the best of both worlds. You get to run your own show in your backyard, but it gives you all the things customers want … including utility outside of the home market," Diane Offereins, executive vice president and president of Discover's payment services unit, told American Banker in an interview on Thursday.

NPCI is a coalition of India's retail payments systems established by the country's banks in 2009. The group's objective is to consolidate and integrate the various retail payment systems in India under the RuPay network.

"We've had discussions with RuPay over the last couple of years … and their needs matched up perfectly with our strategy," Offereins says.

The new agreement will be phased in over the next couple of years, she adds. Further terms were not disclosed.

Discover and Diners Club cards will first be accepted at RuPay ATMs later this year, then at point-of-sale locations early next year. The final phase will enable RuPay global card purchases to be processed on Discover's network worldwide early-to-mid next year.

Over the past couple of years, Discover has forged similar deals in South Korea and Serbia.

Several years earlier the company also struck deals in China and Japan.

Discover is hoping to sign more partnerships of this type, Offereins says: "This is not a one-off thing. This is part of our strategy, and we fully expect to have more of these."

"We're in lots of discussions with lots of other partners," she adds. "There are still a number of smaller national networks out there that could do something like RuPay wanted."

But Discover is still struggling to expand acceptance of its cards worldwide, including to popular tourist spots in Europe, even after its purchase of the Diners Club network from Citigroup Inc. in 2008. That deal was expected to help boost the bank's international presence, where it has historically lagged rivals.

Offereins says the company's strategy in Europe is to partner with acquirers like it does in the U.S., adding that Discover is making inroads in countries including the U.K., Germany and France.