J.P. Morgan Weighs Possibility Of Acquiring Discover Financial
September 02, 2010 1:29 PM
Reuters cited J.P. Morgan (NYSE: JPM) may still look to acquire Discover Financial Services (NYSE: DFS) network or even another financial services network. The deal has been said to be very difficult to complete.
"Its always an opportunity," Chase Card Services Chief Executive Gordon Smith said in an interview on Wednesday.
Banks earn fees from merchants every time their customers pay for something with a credit or debit card. But the banks must also pay independent payments networks, like Visa and MasterCard, to help them process the transactions.
Large banks such as J.P. Morgan could minimize the fees they pay by buying Discover's undervalued financial network business.
"It's one of those things where you sit down with a piece of paper thinking, it's a great idea, why don't you own your own network?" Smith said. But "executionally it's very difficult not impossible, but it's something we can always think about," he said.
It would be hard for Chase to compete with Visa or MasterCard in processing transactions abroad, Smith said.
J.P. Morgan Chase closed yesterday at $37.74
Discover closed yesterday at $15.16
