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Discover Extends Tie-Up with RSB

MA DFS

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In an effort to further strengthen its presence in Russia, Discover Financial Services (DFS - Analyst Report) has penned a contract with Russian Standard Bank (“RSB”) to issue and promote Discover cards in Russia. The agreement, duly signed yesterday at Moscow, takes the partnership of the two organizations a step further as they continue to mutually benefit each other in numerous ways.

RSB will benefit from the improvised technical expertise mastered by Discover as well as boost its card portfolio by the addition of Discover cards. RSB, in turn, will support the company’s growth plans and increase its customer-base significantly.

The partnership will, for the first time, make Discover cards available in the European market. Following the news, Discover’s shares gained 2 cents over last Friday to close at $38.75 yesterday.

The news comes on the heels of Discover extending its network provider agreement with Motorola Employees Credit Union (“MECU”) to use PULSE’s PIN debit network for monetary transactions accessible to 39,000 MECU members.

The company’s competitors are also aggressively expanding their geographic presence. MasterCard Inc. (MA - Analyst Report) announced a five-year strategic alliance with UK’s most dominant communications company – Everything Everywhere – in an attempt to expand its digital payment platform across the Atlantic.

The collaboration will allow MasterCard to enhance mobile commerce (m-commerce) and other digital payments services in the extensive UK market. Currently, Everything Everywhere enjoys a client base of more than 27 million customers.

Discover carries a Zacks #2 Rank, which translates into a short-term Buy rating. We maintain a long-term 'Outperform' recommendation on its shares.

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