Discover Financial Services DFS recently tied up with Car IQ, a California-based financial technology startup, to introduce a payment platform for machine-initiated payments starting with automotive fleets.
Fleet vehicles, connected to Car IQ, will now be allowed to pay for services through the Discover Global Network. Thus customers will be able to enjoy a safe and secure transaction mode.
Car IQ has come up with a touchless machine payment system with the help of which the vehicle turns into a payment mechanism and makes payments for various kinds of car-related services, such as tolls, fuel, repairs, insurance, etc. The vehicle even generates a payment file for Discover Financial once the service is completed. The payment can be done through the Discover Commercial Payments Network.
Rationale Behind the Deal
Per a Fleet Management Market report, the fleet industry is expected to reach $34 billion by 2025. This unique platform is anticipated to capture a fair share of the same market value.
This launch is expected to ease the payment management of vehicles. Designed for vehicles, this is undoubtedly a comprehensive banking and risk management solution. It is a step forward to simplifying fleet transactions.
The strategic move is in line with the company’s objective to find out ways to connect cars and IoT machines to the Discover Global Network. The deal is expected to provide a convenient method for fleet customers, thereby boosting the company’s volume over its network.
The combination of Car IQ’s machine identity and Discover Financial’s expertise in payment and block chain will aid this new initiative to meet the evolving customer’s requirements efficiently.
The Discover Global Network consists of Discover Network, Diners Club International, PULSE and above 15 alliance partner networks worldwide. The company has been constantly taking initiatives to extend its presence.
Last month, it entered into a partnership with Saudi Payments that will enhance the global acceptance for both companies. We expect all these endeavors to bode well for Discover Financial.
Zacks Rank and Price Performance
Shares of this currently Zacks Rank #4 (Sell) company have gained 6.2% in three months’ time, outperforming its industry’s growth of 5.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The price performance came against the other stock movements in the same space, such as SLM Corporation SLM, Global Payments Inc. GPN and Fiserv, Inc. FISV, which have lost 2.9%, 2.1% and 7%, respectively, in the same time frame.
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