Internet services to the company’s licensees. When Diners Club cardholders use their cards outside the host country or territory of the issuing licensee, transactions are routed and settled through the Diners Club network through its centralized service center. To increase merchant acceptance in certain targeted countries and territories, the company works with merchant acquirers to offer Diners Club and Discover acceptance to their merchants. These acquirers are granted licenses to market the Diners Club brands to existing and new merchants. As the company continues to work toward achieving full card acceptance across its networks, Discover customers are using their cards at an increasing number of merchant and ATM locations that accept Diners Club cards worldwide. Diners Club cardholders with cards issued by licensees outside of North America continue to use their cards on the Discover Network in North America and on the PULSE and Diners Club networks domestically and internationally. Network Partners Business The company has agreements with various financial institutions, networks and commercial service providers for issuance of products or processing of payments on Discover networks. The company refers to these financial institutions, networks and commercial service providers as ‘Network Partners’. The company might earn merchant discount and acquirer assessments net of issuer fees paid, in addition to other fees, for processing transactions for Network Partners. The company also leverages its payments infrastructure in other ways, such as business-to-business payment processing. The credit card, student loan, personal loan, home equity loan and deposit products issued through the company’s Direct Banking segment require significant investments in consumer portfolio risk management, marketing, customer service and related technology, whereas the operation of the company’s Payment Services business requires that the company invests in the technology to manage risk and service network partners, merchants and merchant acquirer relationships. Credit Risk Management Credit risk management is a critical component of the company’s management and growth strategy. The company’s credit risk arising from consumer lending products is generally diversified across various accounts without significant individual exposures. The company manages credit risk primarily based on customer segments and product types. Account Acquisition (New Customers) The company acquires new credit card customers through direct mail, Internet, media advertising, merchant or partner relationships, or through unsolicited individual applications. The company also acquires new student loan and personal loan customers through similar channels. In all cases, the company has a process for screening applicants. To identify credit-worthy prospective customers, the company’s credit risk management and marketing teams use proprietary analytical tools to match its product offerings with customer’s needs. The company considers the prospective customer's financial stability, as well as ability and willingness to pay. The company assesses the creditworthiness of each consumer loan applicant through evaluating applicant’s credit information provided by credit bureaus and information from other sources. The assessment is performed using the company’s credit scoring systems, both externally developed and proprietary. For its unsecured lending products, the company also uses experienced credit underwriters to supplement its automated decision-making processes. For its home equity products, experienced credit underwriters must review and approve each application. Upon approval of a customer's application for one of the company’s unsecured lending and home equity products, it assigns a specific annual percentage rate using an analytically driven pricing framework that simultaneously provides competitive pricing for customers and seeks to improve revenue on a risk-adjusted basis. For its credit card loans, the company also assigns a credit line based on risk level and expected return. Portfolio Management (Existing Customers) The revolvi
discover financial services
2500 Lake Cook Road
Riverwoods, IL 60015
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