The PULSE network remains the key driver of payments transaction volume for Discover Financial Services (DFS), growing 5% year-on-year (Y/Y) in the first quarter (Q1/2014) to $41.9 billion, representing 54% of Discover’s network total volume. Overall, DFS’ network volume is up 4% Y/Y to $77.38 billion. The most robust payments business for DFS is its Network Partners segment, up 6% Y/Y in Q1/2014, followed by the Proprietary segment, up 3%. However, DFS continues to struggle with its Diners Club international segment, which slipped down 2% Y/Y in Q1/2014.
In Q1/2014 DFS processed 1.5 billion PULSE transactions, up 2% Y/Y, after peaking at 1.6 billion inn the final quarter of 2013.
DFS credit card volume grew 3% Y/Y in Q1/2014 to $25.7 billion, compared to a sequential record of $29.3 billion for Q4/2013. The DFS total credit card volume inched up 4% to $28.1 billion in Q1/2014, compared to $31.8 billion in the prior quarter and $26.9 billion in the year-ago quarter.
Discover reported that Payment Services pretax income was $28 million in Q1/2014, down $19 million from the prior year. Revenue decreased $8 million from the prior year primarily due to lower transaction processing margins at PULSE. Expenses increased $9 million from the prior year primarily due to ongoing Diners Club costs in Europe.
Diners volume is derived from data provided by licensees for Diners Club branded cards issued outside of North America and is subject to subsequent revision or amendment.
Proprietary Network Volume represents gross proprietary sales volume on the Discover Network.
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