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Discover enters P2P game with Money Messenger

By , CardRatings contributor
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The Discover Card might not be as widely accepted outside the United States as other cards, but its cardholders were just given a whole new way to send money worldwide. Thanks to a deal with PayPal, Discover Card now gives their members access to person-to-person (P2P) payments through Discover's Money Messenger service.

How it works

Cardholders will be able to send money to anyone with a PayPal account, even if the recipient does not have a Discover Card. The service will be free to Discover Card members and will be available from various smart phone apps, such as Android, Blackberry and iPhone, and on the credit card's website. However, Discover does not currently offer the service to its business, corporate or titanium cardholders.

Money Messenger is free for account holders. Each transaction will show up as a normal purchase and is eligible for cash back rewards. Discover touts the simplicity of the new service. Users can send funds to any PayPal member by using the recipient's cell phone number or email address.

By comparison, Visa's P2P service only allows cardholders to transfer funds to another Visa account, while the Serve feature of American Express acts very much like a PayPal account but requires setting up a Serve account.

How it compares

With MoneyMessenger the latest of a growing number of P2P options, some differences are becoming apparent. These include restrictions on to whom money can be sent (only approved account holders, for example) and the fees charged to send and receive money.

As of now, Discover does not charge members a fee for using the Money Messenger service, while American Express charges a fee for certain transactions but not for others, and Visa states on their website that fees will be determined by participating banks.

The launch of Money Messenger comes at a time when the mobile payment industry is exploding. According to a recent story by CNNMoney, the research firm Generator Research predicts mobile payments will reach $633 billion annually by 2014, with an estimated 490 million customers sending money and paying bills with their smart phones and other mobile devices.

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