Discover Cardholders Can Now Send Cash to Anyone With a Phone Number

Discover quietly launched a new service this week, allowing customers to send money from their phone to anyone with an email address or mobile phone number.

The service, which falls under the broader category of person-to-person payments, is part of a growing effort to replace cash transactions.

Other credit card issuers have launched similar services to make it easier to pay the babysitter, a friend or small business without going to the ATM or writing a check. Visa and American Express have made recent announcements, and there are companies like Square that want to help small businesses accept credit cards.

Discover’s service, Money Messenger, is powered by PayPal, which announced the partnership back in October.

Discover, which has millions of cardholders, is the first credit card issuer to go live on PayPal’s third-party payment platform, said Dan Schatt, PayPal’s head of financial innovations.

Schatt said by leveraging PayPal’s services, Discover’s customers can send money to people in 60 countries, as long as the other person has a mobile phone number or email address. The recipients must have a PayPal account, or can open one after the fact. There are roughly 230 million registered PayPal users today.

Other than awareness, there are few hurdles or costs involved.

A Discover customer does not have to have a PayPal account, and it is free to send cash to people. In fact, the payment is treated as a purchase transaction, so members will receive cash back for every transaction, which roughly equates to .25 percent for the first $3,000 spent.

“It’s so strategic and compelling,” Schatt said. “Banks have never been able to penetrate the cash or check market, and cash still dominants. The reality is, people will still pull out $200 to $500 from the ATM and dole it out for various payments over several weeks, or they write checks and banks don’t benefit.”

Discover can use it as a way to find new customers and increase transactions on its network. It’s also, potentially, a defensive move against other technology companies, such as Amazon, Google and Apple, which are likely prepping payment services of their own.

People who receive money from a Discover member will be given the opportunity to sign up for a card.

In a statement, Mike Boush, Discover’s VP of its Ebusiness, said: “This offering provides Discover cardmembers with another way to help them earn rewards on more types of purchases and give them the ability to consolidate and track more of their spending on one payment vehicle.”


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