Discover Financial Services (DFS): Business Model Canvas [Dec-2025 Updated]

You're trying to map the core engine of this major US financial player, trying to see what truly drives its value, even as the industry shifts around it. Forget the noise; the real story is in the mechanics: this company is fundamentally a direct-to-consumer lending machine, funding its $117.4 billion in total loans-nearly $99.0 billion of that in credit cards as of Q1 2025-off a low-cost deposit base, all while running a unique four-party payment network. It's a fascinating setup where a 12.18% net interest margin is the goal, but credit risk, evidenced by a $1.2 billion provision in Q1 2025, is the ever-present cost you need to watch. Want to see exactly how they balance simple cashback rewards against that massive risk exposure and their global network? Dive into the nine building blocks below.

Discover Financial Services (DFS) - Canvas Business Model: Key Partnerships

Key Partnerships for Discover Financial Services, especially following the Capital One acquisition finalized in May 2025, center on expanding network acceptance and fulfilling community commitments.

The strength of the Discover Global Network relies heavily on its relationships with other payment networks, processors, and financial institutions.

PULSE Network, Discover's leading ATM/debit network, maintains a broad base of participants across the U.S. financial landscape.

The Diners Club International brand continues to rely on its established global franchise structure for international reach.

The Community Benefits Plan (CBP), implemented by Capital One post-acquisition, involves significant commitments to various community organizations and development funds.

Here is a breakdown of these critical relationships and associated figures:

• PULSE serves over 4,400+ U.S. financial institutions.
• Diners Club International operates with 40+ issuers across 35+ countries.
• The Discover Global Network has 30 signed network alliances accelerating solutions globally.
• The Capital One/Discover Community Benefits Plan totals more than $265 billion in lending, investments, and philanthropy over five years.

The network acceptance strategy is visibly supported by specific international and regional agreements:

Partner Type	Example/Detail	Scope/Metric
Debit Network Participant	U.S. Financial Institutions	4,400+ institutions served by PULSE.
Global Payments Network Alliance	China UnionPay (CUP)	Alliance enables acceptance of Discover Network Cards at CUP ATMs/POS in China and CUP cards on PULSE in the U.S.
Global Merchant Acquirer/Processor	Network International (Middle East)	Alliance enables acceptance of Mercury Network Cards on DFS networks in over 185 countries and territories.
International Issuing Franchise	Diners Club International	40+ issuers in 35+ countries.
Strategic Network Alliances	Total Count	30 signed alliances accelerating global reach.

The Community Benefits Plan includes specific financial allocations directed through partnerships with community-focused entities:

• $44 billion in community development financing, including support for affordable housing.
• $600 million in capital to nonprofit Community Development Financial Institutions (CDFIs).
• $575 million allocated for philanthropy and pro bono engagements.
• $5 billion anticipated spending on supplier development.
• $15 billion in lending targeted to small businesses in low- and moderate-income (LMI) communities.

The Diners Club segment showed robust growth, with volumes up 18% year-over-year, driven by strength in markets like India and Israel in Q1 2025.

Discover Financial Services (DFS) - Canvas Business Model: Key Activities

You're looking at the core engine room of Discover Financial Services, the activities that actually make the money move, right before and immediately following the Capital One integration in May 2025. Here's the quick math on what they were actively doing.

Credit card and loan origination, underwriting, and servicing.

This is the bread-and-butter lending engine. Underwriting is about managing the risk profile, which you see reflected in charge-off rates. For the first quarter of 2025, credit card loans on the books stood at $99.0 billion, while personal loans were at $10.1 billion. The credit card net charge-off rate for Q1 2025 was reported at 5.47%, though the total net charge-off rate across the portfolio, excluding the student loan sale impact, was 4.99%. This compares to a total net charge-off rate of 4.64% at the end of Q4 2024. Origination activity showed mixed signals; bankcard originations fell by 4.8% in the fourth quarter of 2024 compared to the prior year's fourth quarter, but unsecured personal loan originations increased by 15% in Q3 2024 year-over-year.

The loan portfolio activity looked like this:

Metric	Q1 2025 Amount	Q4 2024 Amount	Change Driver Mentioned
Credit Card Loans (End of Period)	$99.0 billion	$102.8 billion	Seasonal trends
Personal Loans (End of Period)	$10.1 billion	N/A	Relatively flat compared to last year
Total Net Charge-Off Rate	4.99%	4.64%	Seasonal trends

Operating the Discover Global Network (Discover, PULSE, Diners Club).

This is the transaction processing side, where Discover competes directly with Visa, Mastercard, and Amex. Discover Global Network remains the fourth-largest U.S. card network. In 2025, Discover held 5.9% of U.S. credit card purchase volumes, out of a total market volume of $5.4 trillion. Total Discover card transaction volumes surpassed $442 billion in 2025, showing a 9.7% increase from the previous year. The network footprint is large, spanning over 205 countries and supporting 77 million merchants globally.

The sub-networks showed specific growth:

• PULSE network volumes increased 3% in Q1 2025, reaching $81.3 billion.
• Diners Club volumes were $12 billion in Q1 2025, up 18% year-over-year.
• Payment Services pretax income grew 11% year-over-year in Q1 2025 due to volume growth.

Direct-to-consumer deposit gathering and management.

This activity fuels the balance sheet with lower-cost funding. Discover offers checking and savings accounts and certificates of deposit through its banking business. In Q1 2025, the company grew its direct-to-consumer deposit balance by $2 billion in the quarter while reducing average deposit rates by 22 basis points. This segment now accounts for 74% of total funding. Overall, average consumer deposits were up 6% year-over-year and 1% sequentially in Q1 2025.

Risk management and compliance (enhanced post-regulatory issues).

Post-regulatory scrutiny, risk management is a heightened activity. You see the results in the provision for credit losses and charge-off rates. For instance, in Q4 2024, other expenses declined partly due to a reduction in anticipated civil penalties. The credit card 30+ day delinquency rate was down 0.17% in Q1 2025 compared to Q1 2024. The company's operational efficiency improved, with the operating efficiency ratio moving from 40.1% in Q3 2024 to 36.8% in Q1 2025.

Developing and integrating innovative AI for customer support.

The industry trend is clear, and Discover is part of this push. By 2025, 80% of customer service organizations plan to use generative AI to enhance productivity. CX leaders are acting on this, with 64% planning to increase investments in AI in the next year. Specific operational goals for AI include reducing handling time by 30 percent on top five intents or lifting first-contact resolution by 8 points. AI-powered chatbots are noted to reduce customer service costs by 30%, and AI automation resolves tickets 52% faster than traditional methods. Key performance indicators for this activity include Automation rate (or deflection rate), First contact resolution (FCR) for AI, and AI-influenced customer satisfaction (CSAT).

Finance: draft 13-week cash view by Friday.

Discover Financial Services (DFS) - Canvas Business Model: Key Resources

When you look at the core assets driving Discover Financial Services (DFS), you see a mix of significant loan portfolios, proprietary network ownership, and a strong digital funding base. These aren't just line items; they are the engine of the business.

The lending operation is substantial. As of the first quarter of 2025, the total loan book stood at $117.4 billion. That figure is anchored by the core credit card business, which held $99.0 billion in outstanding credit card loans. To give you a clearer picture of the asset mix at that time, here's a quick look at the Q1 2025 financial snapshot:

Financial Metric	Q1 2025 Amount	Year-over-Year Change
Total Loans (End of Period)	$117.4 billion	(7%)
Credit Card Loans	$99.0 billion	Relatively Flat
Personal Loans	$10.1 billion	Relatively Flat
Revenue Net of Interest Expense	$4,251 million	2%
Net Interest Margin (NIM) on Loans	12.18%	Up 115 basis points

The funding side is equally critical, especially given the focus on the direct-to-consumer model. You've got an FDIC-insured deposit base, which is the bedrock for low-cost funding. This is a huge advantage over less-regulated competitors. In Q1 2025, they actually grew direct to consumer deposit balances by $2,000,000,000 in the quarter alone, meaning these deposits now make up 74% of total funding. Remember, FDIC coverage guarantees deposits up to $250,000 per depositor, per insured bank, per ownership category, which is what gives customers the confidence to place their money there.

Then there's the network itself. Owning the rails is a massive resource. The Discover Global Network is comprised of three key components, which you definitely need to track:

• Discover Network: With millions of merchant and cash access locations.
• PULSE: One of the leading ATM/debit networks in the U.S. PULSE dollar volume saw a 3% increase year-over-year in Q1 2025.
• Diners Club International: A global payments network showing strength, with its volume up 18% year-over-year in the same period.

The Payment Services segment, which houses these networks, generated $96 billion in total volume for the quarter. This closed-loop infrastructure provides control and drives non-interest income.

Finally, don't overlook the intangible assets. Discover Financial Services is recognized as the fifth-largest credit card brand in the United States. This brand equity, built since 1985, supports its direct-to-consumer strategy, which relies heavily on its direct-to-consumer digital banking platform and technology infrastructure. They operate without a branch network, so that digital backbone-handling everything from credit card issuance to high-yield savings accounts-is a non-negotiable key resource. Finance: draft a sensitivity analysis on deposit growth rate vs. funding cost changes by next Tuesday.

Discover Financial Services (DFS) - Canvas Business Model: Value Propositions

You're looking at the core things Discover Financial Services (DFS) offers that make customers choose them over the competition. It's about simple value and broad access, especially now that they are integrating with Capital One.

Clear, simple cashback rewards with no annual fees.

The value proposition centers on straightforward rewards, which saw significant customer engagement, with $1.6 billion redeemed by users through the cashback program in 2025. This is a core differentiator, especially when paired with the absence of an annual fee on many of their primary card products.

High-yield savings and money market accounts for depositors.

For depositors, Discover Financial Services offers deposit products that compete on yield and accessibility. You see this commitment in their direct-to-consumer funding strategy, which grew balances significantly while lowering the cost of that funding.

Metric	Discover Financial Services Data (Late 2025)	Comparison/Context
Online Savings Account APY	3.40% APY (Accurate as of 12/05/2025)	FDIC National Average Savings APY: 0.40% APY (as of 6/26/2025)
Minimum Opening Deposit	$0	No minimum deposit required to open
Monthly Fee	$0	No monthly service fee
Direct-to-Consumer Deposit Growth (Q1 2025)	$2 billion increase in balance	Average deposit rates reduced by 22 basis points in the same quarter
Direct-to-Consumer Deposits Share of Funding	74% of total funding	Reflects the success of the direct-to-consumer model

Direct-to-consumer model with award-winning customer service.

The direct-to-consumer approach means fewer intermediaries, which supports their service quality. This focus is reflected in external validation; Discover ranked number 2 in the 2025 J.D. Power U.S. Credit Card Satisfaction Study. The cardholder base supporting this model stood at over 51 million worldwide in 2025. That's a lot of people expecting good service.

Global acceptance for cardholders via the Discover Global Network.

The Discover Global Network provides essential reach for cardholders, positioning it as the fourth-largest U.S. card network. You can use this network in a significant portion of the global market.

• Discover holds 5.9% of U.S. credit card purchase volumes out of a total of $5.4 trillion in 2025.
• Credit card transaction volumes surpassed $442 billion in 2025, a 9.7% increase year-over-year.
• The Discover Global Network spans over 205 countries.
• The network supports 77 million merchants globally.

Competitive personal and home loan products.

Discover Financial Services maintains a presence in lending beyond credit cards. Loan balances on Discover cards totaled $82 billion. Also, the personal loans on the books were reported at $10.1 billion as of the first quarter of 2025. Finance: draft 13-week cash view by Friday.

Discover Financial Services (DFS) - Canvas Business Model: Customer Relationships

You're looking at how Discover Financial Services (DFS) connects with its diverse customer base as of late 2025. The relationship strategy blends high-touch support with sophisticated digital tools, all while managing a vast global network.

Dedicated, high-touch customer service (US-based call centers)

While specific call center volume data isn't public, the commitment to service quality is evident in industry rankings. Discover Financial Services ranked #2 in customer satisfaction in the 2025 J.D. Power U.S. Credit Card Satisfaction Study. Furthermore, the company secured the top spot, ranking #1 in customer satisfaction for fraud protection in 2025. This suggests that when customers do need to engage directly, the experience is highly rated, which is a key differentiator for a company that issues its own cards and manages its own network.

Automated, personalized digital self-service via mobile app and web

The push toward digital is clearly working; Discover's mobile app usage saw a significant 17.3% growth in 2025. This digital focus supports a base of over 51 million cardholders worldwide. The platform itself is well-regarded, maintaining a 4.9-star rating across app stores. For the banking side, direct-to-consumer deposits have become central to funding, now accounting for 74% of total funding, which speaks volumes about customer comfort with the digital interface for core financial tasks. Financial platforms are increasingly using real-time data to adjust interfaces and workflows, making interactions intuitive and personalized, which helps foster long-term loyalty.

Here's a snapshot of the digital and customer scale:

Metric	Value (as of late 2025/Q1 2025)
Total Cardholders Worldwide	Over 51 million
Mobile App Usage Growth (2025)	17.3%
App Store Rating	4.9-star
Direct-to-Consumer Deposits Share of Total Funding	74%
Gen Z and Millennial Cardholder Share	48%

Transactional relationship for network partners and merchants

The relationship with merchants and partners is foundational, as Discover operates the Discover Global Network, the fourth-largest U.S. card network by purchase volume. The network itself spans over 205 countries and supports 77 million merchants globally. Different segments of the network show varied transactional health in early 2025. For instance, Diners Club volume showed robust growth, up 18% year-over-year in Q1 2025, driven by strength in India and Israel. Conversely, the PULSE network, one of the largest ATM/debit networks, saw its dollar volume increase by 3% to $81.3 billion in Q1 2025. However, the Network Partners volume saw a sharp decrease of 73% in Q1 2025, which was attributed to the anticipated exit of a specific partner.

The company supports 16% of U.S. e-commerce payments in 2025, showing its critical role in online transactions.

Proactive debt management and financial education tools

Discover Financial Services actively provides tools and pathways for customers facing financial strain. The company's financial literacy initiatives reached 12.5 million Americans in 2025, focusing on areas like responsible borrowing and credit repair. For cardholders carrying balances, the company works with nonprofit agencies to facilitate Debt Management Plans (DMPs). While the total outstanding credit card balance for Discover clients was reported at $102.8 billion (a figure from a period leading into 2025), the firm's proactive stance is reflected in its credit metrics and educational resources. In Q1 2025, the credit card net charge-off rate stood at 5.47%, and the 30+ day delinquency rate was 3.66%. The bank also offers online resources, including financial calculators for debt consolidation and personal loans, supporting customers who set goals like paying down debt, which was a resolution for 21% of consumers surveyed for 2025 plans.

Key metrics related to credit health and financial goal setting include:

• Credit Card Net Charge-Off Rate (Q1 2025): 5.47%
• Credit Card 30+ Day Delinquency Rate (Q1 2025): 3.66%
• Americans planning to pay off or consolidate debt in 2025: 21%

If you're looking at the overall customer engagement, remember that 87% of users cite cashback rewards as their primary reason for choosing Discover.

Finance: draft the Q2 2025 customer service satisfaction survey analysis by next Tuesday.

Discover Financial Services (DFS) - Canvas Business Model: Channels

You're looking at how Discover Financial Services (DFS) gets its products and services to you and its merchants. Since DFS has no branch network for its Direct Banking segment, the digital and partner channels are absolutely critical.

The Direct-to-Consumer (D2C) channel is entirely digital for applications and account management. For the Payment Services side, the reach is through the PULSE network and Discover Global Network alliances.

Here's a breakdown of the key channels:

• Direct-to-Consumer (D2C) online application and account management.
• Mobile banking application for all products.
• Direct mail and digital advertising for new card/loan acquisition.
• 380,000+ PULSE ATM network locations in the US.
• Merchant point-of-sale (POS) terminals globally via network partners.

The digital experience is a major focus; for instance, in 2025, financial institutions are embracing design thinking and adaptive user interfaces (UIs) to craft dynamic, customer-centric journeys. Also, mobile banking has massive adoption, with 3.6 billion banking app users globally by the end of 2024.

For acquisition, direct mail remains a key lever in the financial services industry, which is highly competitive. Financial services companies increased direct mail volumes from 48.3 million in 2024 to 69 million in 2025 to drive acquisition, retention, and compliance. To be fair, 81% of financial services leaders say direct mail is their top-performing channel. Furthermore, 54% of Gen Z view a financial services brand as more credible if they receive direct mail.

The mobile channel is seeing strong usage, though specific DFS app numbers aren't public. We do know from 2024 data that 38% of debit cards are loaded into digital wallets. Also, 24% of all in-store contactless payments in the U.S. were generated from smartphones and wearables in 2025.

The physical access channel relies heavily on the PULSE network, which is part of the Discover Global Network. The network supports cash access and POS transactions.

Channel Metric	Data Point	Source Year/Context
PULSE ATM Network Locations (US)	More than 380,000	PULSE Network Fact Sheet
PULSE Financial Institutions Served	More than 4,400 U.S.	PULSE Network Fact Sheet
Discover Global Network Merchant Acceptance Points	Over 50 million	Discover Global Network (as of 2021)
Discover Global Network Countries/Territories	Over 200	Discover Global Network (as of 2021)
Financial Services Direct Mail Volume (Projection)	69 million pieces	Financial Services Direct Mail Report (2025)
Financial Services Direct Mail Performance Improvement Reported	72% of marketers	2025 Direct Mail Guide

The Payment Services segment, which includes the PULSE network, contributed 3% to Discover Financial Services' revenue. The overall Discover Global Network leverages 30 network alliances to accelerate solutions and expand reach.

For debit usage, active cardholders made 35.2 transactions monthly in 2025, with debit transactions increasing 2.5% year-over-year. Card-Not-Present (CNP) transactions accounted for 45% of total debit spend in 2023.

Finance: draft 13-week cash view by Friday.

Discover Financial Services (DFS) - Canvas Business Model: Customer Segments

You're looking at the core groups Discover Financial Services (DFS) serves across its banking and payment services. Honestly, the customer base is quite segmented by product line, which makes sense given the Digital Banking and Payment Services structure.

For US mass-market consumers seeking simple, high-value credit cards, the scale is significant. Discover Card now serves over 51 million cardholders worldwide. In 2025, Discover held 5.9% of U.S. credit card purchase volumes, out of a total market volume of $5.4 trillion. Credit card transaction volumes for DFS surpassed $442 billion in 2025. The average Discover cardholder has a $9,300 credit limit and spends $1,320 per month using the card. The rewards appeal is strong, with $1.6 billion in cashback rewards redeemed by users in 2025. Younger consumers are key; Millennials and Gen Z now represent 48% of the cardholder base, and 62% of new accounts in 2025 were opened by consumers under 40.

Depositors looking for competitive high-yield savings products show strong engagement. Direct-to-consumer deposits totaled $90.6 billion by the end of 2024, an 8% increase year-over-year. In the first quarter of 2025, average consumer deposits were up 6% year over year, and the company grew direct-to-consumer deposit balances by $2 billion in that quarter alone. These deposits now account for 74% of total funding.

The network side targets financial institutions and international travelers distinctly. For financial institutions utilizing the PULSE debit network, the network saw growth; PULSE dollar volume was up 3% in Q1 2025. For context from the prior year, the 2024 Annual Dollar Volume for PULSE was $328 billion, with 9.6 billion annual transactions. Active cardholders on the PULSE network made 35.2 transactions monthly, according to the 2025 Debit Issuer Study.

Frequent international travelers are served via Diners Club International cardholders. This segment showed strength, with Diners Club volume up 18% year-over-year in the first quarter of 2025. The value proposition of zero foreign transaction fees contributed to a 12% increase in usage among this group in 2025.

The commercial segment, tied to the Diners Club network and the pending Capital One merger (which received regulatory approvals on April 18, 2025), is also a customer group. Here are the network volume metrics:

Network Segment Customer Group	Metric Type	Value	Period/Context
US Mass-Market Consumers (Credit Card Loans)	Ending Loan Balances	$99.0 billion	Q1 2025
US Mass-Market Consumers (Cardholders)	Total Cardholders	Over 51 million	2025
Depositors	Total Direct-to-Consumer Deposits	$90.6 billion	End of 2024
Depositors	Deposit Growth in Q1 2025	$2 billion	Q1 2025
Financial Institutions (PULSE)	Q1 2025 Dollar Volume	$81.3 billion	Q1 2025
Financial Institutions (PULSE)	2024 Annual Transaction Volume	9.6 billion	2024
International Travelers (Diners Club)	Volume Growth	18%	Year-over-year (Q1 2025)

You can see the mix of direct consumer relationships and network partnerships clearly here. The focus on digital engagement is also evident in the consumer segment.

• Millennials and Gen Z: 48% of Discover cardholder base.
• New Discover accounts opened by consumers under 40: 62% (2025).
• Cashback rewards redeemed: $1.6 billion (2025).
• Card Yield: 16.12% (Q1 2025).
• Digital debit payments: Nearly half of debit spend is card-not-present.

Finance: draft Q2 2025 segment performance comparison by Wednesday.

Discover Financial Services (DFS) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive the operations of Discover Financial Services (DFS) as of mid-2025, right after the Capital One merger closed. These are the big drains on the bottom line you need to track.

The single largest variable cost tied to lending is the Provision for credit losses. For the first quarter of 2025 (Q1 2025), this provision was reported at $1.2 billion. This figure reflected a decrease of $253 million from the prior year quarter, driven by a favorable reserve change of $190 million and a $97 million decrease in net charge-offs. To be fair, the provision for the quarter ended March 31, 2025, was also cited as $1.24 billion, down 17% from the year-ago period's $1.50 billion.

Funding costs, or the Interest expense on deposits and borrowings, is a major component. While specific interest expense dollar amounts for the most recent quarter aren't immediately broken out in the same detail as other expenses, the trend is clear. In Q1 2025, net interest margin expansion was explicitly noted as being driven by lower funding costs. Conversely, for the full year 2024, Net Interest Income was partially offset by higher funding costs.

Technology and compliance represent significant, often structural, operating expenses. DFS had to put in substantial investment to address regulatory scrutiny. Compliance and risk management spending was estimated to be nearing $500 million for 2024. In Q1 2024, operating expenses surged 67% to $2.31 billion as the company worked to fix regulatory challenges. Technology investment is also a constant. For instance, in Q4 2024, Information Processing & Communications expense was $208 million, a year-over-year increase of $38 million, or 22%, due to technology investments.

Here's a look at some of the key expense line items from the Fourth Quarter 2024 results, which sets the stage for 2025 spending:

Expense Category	Q4 2024 Amount (in millions)	Year-over-Year Change
Employee Compensation and Benefits	$792	Up 23%
Marketing and Business Development	$299	Down 20%
Professional Fees	$363	Up 16%
Information Processing & Communications	$208	Up 22%

Employee compensation and benefits saw a notable year-over-year jump in Q4 2024. The reported expense was $792 million, which represented an increase of $146 million, or 23%, compared to the prior year. This rise was attributed to higher wage and benefit rates and employee retention actions.

For Marketing and advertising costs, the trend in late 2024 showed a reduction, likely strategic ahead of the merger close. Marketing and Business Development expense in Q4 2024 was $299 million, down $73 million, or 20%, from Q4 2023. This decline was specifically due to the timing of broad market advertising compared to higher costs in the fourth quarter of 2023, which included customer remediation efforts.

You should keep an eye on these cost drivers:

• Provision for credit losses: $1.2 billion in Q1 2025.
• Employee Compensation: $792 million in Q4 2024.
• Technology Investment: Information Processing expense up 22% in Q4 2024.
• Compliance Spending: Estimated near $500 million for 2024.
• Marketing: Declined 20% in Q4 2024.

Finance: draft 13-week cash view by Friday.

Discover Financial Services (DFS) - Canvas Business Model: Revenue Streams

You're looking at the core ways Discover Financial Services (DFS) turns its operations into dollars, based on the most recent standalone figures from Q1 2025. Honestly, the business is still heavily reliant on the spread between what it earns on its loans and what it pays for funding.

Net Interest Income (NII) remains the bedrock. This comes from the interest earned on the loan balances held across the company's portfolio, which includes credit cards and personal loans. For the first quarter of 2025, the net interest margin (NIM) on loans stood at a strong 12.18%. This margin expansion, up 115 basis points versus the prior year, was a key driver of profitability, even as total loans ended the quarter at $117.4 billion, down 7% year-over-year due to the student loan sale. Credit card loans were $99.0 billion and Personal loans were $10.1 billion at the end of Q1 2025.

The table below breaks down the key interest and fee-related income components from the Digital Banking side of the house for Q1 2025:

Revenue Component	Q1 2025 Amount (in millions)	Year-over-Year Change
Net Interest Income	$3,558	2%
Loan Fee Income	$204	2%
Total Revenue Net of Interest Expense	$4,251	2%

Next up is Non-interest income, which saw a year-over-year increase of 3%, or $15 million, primarily fueled by higher net discount and interchange revenue. This revenue stream is where Discover earns money from merchants accepting its cards. For a deeper look at the components contributing to non-interest income in Q1 2025:

• Discount/Interchange Revenue: $1,037 million
• Discount and Interchange Revenue, net: $334 million
• Loan Fee Income: $204 million
• Transaction Processing Revenue: $89 million
• Total Non-Interest Income: $693 million

The Payment Services segment, which houses the network operations, is a distinct revenue generator. Its pretax income for Q1 2025 was $91 million, marking an 11% increase year-over-year, driven by volume growth in PULSE and Diners Club. This segment's revenue is directly tied to transaction processing fees across its networks.

The volume driving that Payment Services income shows where the activity is happening:

• Total Payment Services Volume: $96 billion (down 4% YoY)
• PULSE dollar volume: Up 3% year-over-year
• Diners Club volume: Up 18% year-over-year
• PULSE network volume alone reached $81.3 billion in Q1 2025.
• Diners Club segment volume was $12 billion.

The line item covering Fees from personal loans and other consumer products is captured by the Loan Fee Income component within non-interest income, which totaled $204 million for the quarter. Also, the Network fees from PULSE and Diners Club International transactions are the primary drivers of the Transaction Processing Revenue, which was reported at $89 million in Q1 2025. You see, Discover acts as both the issuer and the network, so these fees flow directly into the top line, contributing to that $91 million Payment Services pretax income.

Finance: draft Q2 2025 revenue projection by next Tuesday.