In landing a network agreement with Brazil's Elo Global Cards last week, Discover Financial Services gained another ally in its ongoing push for global expansion.

As far back as 2007, Discover Financial Services has been entering partnerships with global brands such as UnionPay in China and JCB in Japan. The new agreement with Elo simply calls for allowing Brazilian cardholders to initiate transactions through Discover's networks, but it positions the Riverwoods, Ill.-based card brand to work more closely in the Brazilian market on emerging payments and card adoption.

The network agreement with Elo is a "big win for Discover" and its many other partners, said Miren Desai, the global head of network alliances for Discover.

Though not able to comment on which partners stand to gain the most from Discover accepting Elo cards in the network, "these relationships are mutually beneficial to all partners," Desai said.

Back in 2012, Discover agreed to support swiped card transactions from PayPal accounts, giving the alternative payments company a widespread presence at the point of sale. The card brand has also engaged in partnerships to support mobile wallets from Apple, Google and Softcard.

Though the Elo pact has the potential to benefit all of these partners, Discover is initially focusing on "appealing a little bit more to the traveler," said Michael Taiano, senior research analyst with Burke & Quick Partners LLC.

Discover recently introduced more travel-based rewards to its customers on the Discover It card platform.

"There is not a significant financial impact in the Elo arrangement in and of itself, but when you are able to do a multitude of these types of relationships you are able to effectively have a global network as opposed to one that is essentially domestic," Taiano added.

In the same manner that American Express has tried to beef up its card acceptance at small merchant locations through the OptBlue program, Discover is looking to strengthen its global network through network-access alliances, Taiano added.

"It's a way of globalizing the payments network without having to actually invent and grow or build a network outside of the U.S.," Taiano said. Brazil is a large card market, but "under pretty significant duress right now with the currency fluctuations going on," he added.

However, through Elo, Discover is now engaged with an emerging market "with more potential growth over time," Taiano said.

Discover also has global alliances in India, the Middle East, Puerto Rico, Serbia, South Korea, Vietnam, Europe and other regions.

Elo Global Cards, founded by Banco do Brasil, Bradesco and Caixa banks in Brazil, officially launched in 2011 and has issued more than 80 million cards. The cards are generally bank-branded, but will have the potential to issue Discover branded or Discover Diners branded cards.

Discover sees significant benefit in potentially having access to those cards, Desai said.

"We have the third largest network in the world, and we are moving into a market that is growing very fast, as Brazil is the fifth largest population country in the world," Desai said. "We want to be a global leader and player, and we want a relationship with Brazil's emerging market."

Through the network agreement Elo will continue to serve its own cardholders, but will benefit from access to Discover's security technology, Desai added.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry