Apple held discussions last year to acquire Discover Financial Services, but the talks fell through before Apple made a formal offer, Bank Innovation reported on Wednesday (Sept. 17).
The acquisition, which would have cost Apple about $37 billion, was apparently a backup plan in case Apple could not reach a deal with issuers and other networks to partner the Apple Pay launch, unnamed sources said, adding that only after rumors of the deal surfaced that other card issuers signed on for Apple’s mobile payments effort.
The other reason for spending $37 billion on Discover? China’s UnionPay, which signed a long-term deal with Discover in 2005 and has since expanded to let UnionPay cards be used throughout North and South America at point-of-sale terminals and in mobile wallets. The Discover-UnionPay ties have reportedly worried U.S. financial institutions, who fear that a tech company could disrupt conventional card payments through Discover and UnionPay — exactly what Apple considered in 2013.
UnionPay became the world’s largest payment card issuer in March 2014, with 3.5 trillion cards in circulation.
Discover was not one of the card brands announced by Apple as an partner at the Apple Pay launch last week. But an Apple-UnionPay announcement is expected in October, and sources said a Discover deal is likely as well.
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