Apple acquire Discover?

Over the past few years Apple has slowly started to expand it services department. Within service’s are apples subscription plan Apple Music. Another growing business inside of Apple’s ecosystem is Apple Pay. Apple Pay is offered through many online taylor’s as well as plenty of retailers across the United States in the world. Apple has partnered with credit cards and banks to offer Apple Pay as a service with their products. Mobile payments will continue to grow and replace many of these credit card transactions with digital credit card transactions for form through Apple Pay. Visa MasterCard American Express and Discover are the four major payment networks used in the US. The clear leader by far is Visa followed by American Express, MasterCard & Discover. Discover lags the pack and does not have the customer recognition Visa has. Discover could be a viable competitor to a network such as Visa if it was under the management of a Silicon Valley powerhouse such as Apple or Google. These networks charge a transaction fee for every purchase made. Collecting these fees instead of letting them go to Visa or American Express would be a viable option for Apple to expand its profits within it’s Apple Pay network. Apple could easily offer exclusive credit cards and a banking service to operate right through the Apple Pay ecosystem with the purchase of Discover. The consumer base of Apple is quite loyal and would likely gather market share from the other three  competitors. Apple could also revive the Diners Club International brand which is owned by Discover currently.  MasterCard Visa are valued at over $200 billion while American Express is currently valued at over $80 billion. Discover is valued slightly north of $20 billion. With a nice premium an acquisition of discover by Apple would be complete using a small percentage of apple’s cash.

 Apple claims it services revenue will continue to grow at a fast pace. Acquisitions such as this would help that service revenue grow add an even faster rate. Discover would fit well into apples growth as the company diverses its revenue dependence from hardware sales.