Gary Peterson used to discourage merchants from accepting Discover cards. He resented the card brand because its 800-member sales force competed with his independent sales organization for merchant-services accounts.

But those bad old days of the '90s have ended. Today, Peterson says his opinion of Riverwoods, Ill.-based Discover Financial Services has shifted "180 degrees."

"Now, they're absolutely fabulous people to work with," says Peterson, president and CEO of Arlington Heights Merchant Banc in Mount Prospect, Ill.

His shift from one extreme to the other doesn't surprise anyone at Discover. In fact, John Badovinac, the brand's senior manager of acquirer relations, calls Peterson's change of heart a "microcosm" of the company's journey.

Discover got into the merchant acquiring business because competitors Visa Inc. and MasterCard, which were then associations of banks, issued "exclusionary rules" that prevented member banks from issuing Discover and American Express cards.

"We were basically forced into going door-to-door" to sign up merchants for Discover, Badovinac says.

Animosity with ISOs grew as Discover's venture into acquiring resulted in "growing pains" and "bumps in the road" as the brand's massive inside sales force scrambled for accounts, Badovinac admits.

In the meantime, Discover became the country's sixth largest acquirer.

But in 2004, the U.S. Supreme Court let stand a lower-court ruling in an antitrust case brought by the U.S. Department of Justice that forced Visa and MasterCard to abandon the exclusionary rules.

Discover started a push that same year to enlist ISOs to help increase its acceptance among merchants, Badovinac says. At the time, a little more than 60% of the merchants that accepted Visa or MasterCard were accepting Discover, he says, citing published reports.

That first year, more than a million merchants signed on to start accepting Discover cards, Badovinac notes.

By now, 97% of Visa or MasterCard merchants accept Discover, and it happened with the help of America's ISOs, Badovinac says. All of the nation's 100 largest acquirers are promoting Discover, he adds.

Along the way, mutually beneficial relationships have blossomed with ISOs, says Peterson. "They started looking upon us as partners," he maintains.

"We've done a lot of listening," Badovinac observes.

Discover displayed its willingness to work together with ISOs at the recent Midwest Acquirers Association 10th Annual Conference in Chicago.

Attendees picked up bags emblazoned with the Discover logo as they entered the exhibit hall. Discover dominated the exhibit floor with the show's largest booth and commanded attention by managing to place the booth a few feet from the entrance.

Meanwhile, a Discover website offers ISOs free signs and materials to send to merchants or leave behind after sales calls, Badovinac says.

Beginning next month, ISOs will earn Discover gift cards every time they convince a merchant to engage in a test to ensure the point-of-sale equipment accepts Discover transactions, he adds.

In some circumstances, a terminal trade-out program replaces older equipment that won't accept Discover cards, Badovinac says. The program also presents ISOs with an opportunity to help merchants get ready for Near Field Communications and EMV chip cards, he notes.

Persuading merchants to accept Discover brings ISOs another benefit, Badovinac maintains. Along with Discover, the merchants also will be able to accept Diners Club, a unit of Discover, and Japan's JCB, China's UnionPay, Korea's BC Card, Serbia's DinaCard and India's RuPay.

In a new initiative Discover is working with the value-added resellers of point-of-sale equipment to make sure the software accepts the brand, Badovinac says.


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