Discover Card: From a Sears Experiment to Capital One's $35.3B Takeover

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Discover was born inside Sears, Roebuck and Company. In 1981 Sears bought the brokerage Dean Witter Reynolds and the real estate firm Coldwell Banker, aiming to become a one-stop financial supermarket, and in 1985 it quietly acquired the Greenwood Trust Company, a small bank founded in Greenwood, Delaware, in 1911, whose charter became the legal vehicle for the Discover card. Customers did not want to buy stocks where they bought socks: the card operations lost $22 million in the fourth quarter of 1986 and $25.8 million in the first quarter of 1987. Sears spun the financial business off in March 1993 as Dean Witter Discover & Co., which merged with Morgan Stanley in 1997, and in 1998 the card unit became Discover Financial Services and retired the old Novus logo.

Visa and MasterCard barred member banks from issuing Discover cards, and Discover took them to court. In October 2004 the Supreme Court let stand a ruling that the exclusionary rules violated antitrust law, and in October 2008 Discover settled for $2.75 billion, then the third largest legal settlement in U.S. history. It bought the Pulse debit network for $311 million in 2005, Diners Club International from Citigroup for $165 million in 2008, Citigroup's student loan business in 2010 and LendingTree's home loan assets for $45.9 million in 2012. The 2008 crisis forced it to take $1.2 billion in TARP funds, repaid by 2010, and in 2012 the FDIC and CFPB ordered more than $200 million in fines and refunds over telemarketing of credit protection products. In May 2025 Capital One acquired Discover in a $35.3 billion all-stock deal, creating the largest U.S. card issuer and gaining its own payment network.

• Discover's first big win after the court victory was a GE Consumer Finance deal to issue Discover cards for Walmart and Sam's Club, which Walmart ended in 2014.
• Discover sponsored the Times Square New Year's Eve ball drop from 1998 to 2007 and paid $10 million to rename a Georgia mall Discover Mills.
• It launched DiscoverCard.com in 1995 and introduced the industry's first keychain credit card in 2002.
• The 2013 Discover it card popularized 5 percent cash back in rotating quarterly categories.
• Discover was the first major card issuer to print customers' FICO scores free on monthly statements.