Discover, InteliSpend ink multi-merchant card deal

NEW YORK — Discover Financial Services Inc. on Monday said it signed a deal under which InteliSpend Prepaid Solutions will issue multi-merchant gift cards on the Discover network.

Terms of the three-year agreement were not disclosed.

The exact products are not yet designed, but will carry the Discover logo. They will be issued by third parties, possibly including St. Louis-based InteliSpend or banks, said Farhan Ahmad, Discover's general manager of prepaid and emerging payments.

The cards can be used at a set number of merchants, rather than being restricted to one merchant or usable wherever Discover is accepted. They will not be reloadable.

Ahmad said the restricted use makes them the "perfect hybrid" between single-store gift cards and general purpose prepaid cards from a business perspective. Single store cards are less expensive to issue, but not as flexible for the user. The multi-store format keeps costs down while giving the user more choices.

The deal represents another step for Discover into the prepaid market, which is not currently a large part of its business. The prepaid business is growing, and may take on a bigger role if pending federal fee restrictions on debit card use take effect and lead to banks ending debit programs.

InteliSpend, based in Fenton, Mo., typically offers products that are aimed at the business-to-business segment, including cards used as gifts and incentives for business people. While this deal is for business-to-business products, InteliSpend is working with Discover to expand its consumer business.

Shares of Riverwoods-based Discover Financial slipped 17 cents to $21.44 in afternoon trading. The stock has ranged from $12.11 and $22.04 in the past 52 weeks.