Past perception is mostly responsible for many SMB owner’s hesitance when it comes to accepting Discover Card as a payment form. Both Discover and American Express operate on their own network, while Visa and MasterCard operate through the Visa Interchange Network. This gives them the ability to charge whatever they want to use their network. There was a time when it was quite a bit more expensive to accept those card types and merchants got a sour taste in their mouth. For smaller businesses with tight margins, costs involved with accepting credit cards is an important consideration and as a result Discover did not enjoy wide acceptance. Over the years though, that has changed dramatically for Discover, (even if not much has for Amex) and merchants unwillingness to accept Discover card is most due to lack of education or just being rooted in the past.
However, Discover remains an extremely popular choice for consumers. The Discover it Card and its siblings have gained mass appeal for a majority of the public by offering no annual/enrollment fees along with competitive rewards all while maintaining low introductory rates.
Discover it card the most popular rewards card with younger consumers.
When a business accepts a credit card for payment for products and services the business will be subject to paying a fee for using the Interchange to process those payments. One can think of Interchange rates as the wholesale cost that the credit card networks charge (and is passed on to the merchant by the processor) in order to use their network.
We take a deeper dive into the explanation of interchange rates and pricing here but for the purposes of this article, just know that Interchange fees make up the bulk of the total costs for merchants to accept credit cards.
The rates differ for each type of card presented and apply to credit, debit, corporate, rewards, and international cards. The base rate can also differ depending on how the transaction is processed, whether it be in-person, manually keyed in, or a recurring payment type of transaction.
Visa and MasterCard both charge higher rates for rewards cards and corporate cards than, say, a basic credit card or a debit card. They also may charge higher rates for cards that are manually entered or a “card not present” (CNP) transaction such as for a recurring subscription than they do for a transaction where the card was physically run through a credit card terminal – regardless of whether it is swiped, an EMV chip or NFC contactless transaction.
Discover is no different.
The main difference is that Visa and MasterCard run on the Interchange Network and Discover owns its own network, and while Visa and MasterCard both publish their base rates publicly, Discover does not.
But, per their own website, they are competitive with both Visa and MasterCard’s rates. It’s true, the current Discover rates are pretty competitive with the current Visa/MasterCard Interchange Rates.
Anywhere from 1.5% for the most basic card type to up to 2.4% for a premium type card that was also manually entered. In fact Discover debit card rates are very competitive compared to other card issuing companies.
On top of that, Visa and MasterCard both hit merchants with a fee increase to their interchange rates that went into effect this last April.
Of course, because there are other fees charged in addition to interchange it is important to work with a payment service provider that is reputable and transparent about their markup and fees and assessments that are being charged to your merchant account.
Benefits of accepting more payment options, such as Discover Card, are many.
Giving your customers more options to make their purchases with their preferred choice of payment option and in their preferred way helps to reduce friction at the point of sale, increases consumer confidence in your company and improves customer satisfaction and could possibly bless you with increased sales.
As we said before, Discover is enjoying a larger consumer base than ever before due to its generous rewards and lack of annual fees. Not surprisingly, Discover now holds the spot for the best Cash Back Rewards card in America and consumers who have a rewards card will tend to use that card as their primary payment of choice at the businesses that accept that card. Studies have also shown that consumers who receive cash back or other rewards tend to spend more than consumers who do not.
There are also many other international card types that are accepted over Discover’s Global Network allowing merchants to do business with and accept payments from all of their international visitors, business contacts and customers.
Discover goes the extra mile to provide not only their card holders, but the merchants who accept their cards, with exceptional customer service that is 100% American based. Whew!
Merchants will not need to endure any new or more paperwork and invoices when accepting Discover in addition to the other card brands. All processing and billing is integrated on your current statement for streamlined accounting.
Discover is truly comparable with both Visa and MasterCard rates and is less expensive than accepting Amex, by at minimum 1%, which can add up.
In addition, American Express does make it a bit more difficult for merchants to begin accepting Amex cards by making merchants choose to accept it or not on their application, and forcing merchants to set up an additional merchant Id just for American Express. And, if the business is a large corporation processing over a specific volume of transactions annually, Amex requires them to set up an account directly through Amex instead of utilizing their current payment service provider.
Merchants, on the other hand, do not have to do anything different in order to accept Discover Cards. In fact, many may already be capable of accepting Discover! This is because acceptance of Discover Cards is already included in each merchant ID that is issued allowing merchants to use the same merchant account they were set up with to accept all other credit and debit card types to go ahead and begin accepting Discover as well.
As you can see, it is not only easy to accept Discover in your business, but there are many benefits to putting aside old grudges and saying Yes! to your loyal customers when they want to use their favorite card at your establishment. If you would like to find out more about accepting the various payment types, merchant account rates, or merchant cash advances for your business give us a call today! Our transparent pricing model allows business owners to take advantage of all the great benefits of accepting credit cards, including Discover Card while also keeping an eye on their bottom line!