DigitalOcean appears to no longer accept Discover cards | Hacker News Reader

DigitalOcean appears to no longer accept Discover cards

31 pointsnathanaldensr12 comments

I'm a United States resident. I attempted to sign up for a $5 droplet today using my personal Discover credit card. Despite the DigitalOcean UI clearly indicating they accept Discover, upon submitting the form I received the error "We encountered an error processing your card. Please try again." I used their PayPal option instead (ugh, PayPal is evil) and PayPal gladly took the same card and charged it. I was able to order my droplet.

I then emailed support and asked them what was going on. I got this reply:

> Due to a disproportionate number of fraudulent transactions originating from your bank or card issuer, we can no longer accept payments from this institution. In this case, you will need to use a different credit card or use PayPal in order to make a payment.

My Discover card is issued by Discover themselves; there is no intermediary or third-party involved. Does this mean DigitalOcean no longer accepts any Discover cards? Speculating here, but perhaps Discover themselves or whatever payment processor DigitalOcean uses cut them off from accepting Discover cards?

What gives? Has anyone else seen this?

I can't find a source for this, but have it on good authority from a contact in the payments space, that Discover (in their role as a card-issuing bank) has recently begun an absurdly merchant-unfriendly practice of automatically initiating chargebacks, based on their own behavioral analysis systems, unilaterally bypassing the otherwise-standard practice of awaiting the cardholder's confirmation that a transaction is fraudulent/unintended before initiating a chargeback.

And since every single chargeback is immediately deducted from merchant accounts and adds to an opaque counter that, when tripped, can cause the merchant to be effectively blacklisted by all reputable acquiring banks... you're basically placing your company's future in the hands of Discover's algorithms. With a business like Digital Ocean's that is already dealing with fraudulent cards being used for crypto mining, they're almost certainly treated especially harshly by said algorithms, and are wildly conscious of that blacklist. I'm not at all surprised that their operations team has pulled the plug on Discover even before updating the UI of supported cards.

I know this is unverified but it does make sense. The support agent's reply was a bit ambiguous but I figured based on DigitalOcean's own UI not having been updated to remove Discover support that there was a good chance it wasn't even DigitalOcean's doing.

I guess we'll see.

Just thought of something else: For those who currently have a Discover card as their payment method, you might want to switch to something else to ensure your service doesn't get interrupted.

I would guess they'll keep allowing existing cards. They present a far smaller fraud risk.

An update: It seems DigitalOcean has made some improvements and are now accepting Discover cards again.

> Regarding the trouble we had in offering a working solution, it seems that we misunderstood what you meant when you said your card was issued by Discover. We interpreted your inquiry to mean there is an issue with the Discover card network rather than with Discover Bank. After reviewing your account log, I was able to determine that we were blocking all transactions from Discover Bank due to a high rate of fraudulent transactions at some point in time. We have since made improvements to our fraud prevention systems so, with the help of our security team, I was able to get that block lifted.

I was able to add my Discover card today.

I have used credit cards for about 45 years. I worked at a major US bank CC collection call center for 12 years. Discover has been the card I use most for decades. When I have needed help, I have always been able to reach a US based agent to help me.

Doesn’t discover have absurd fees for merchants

IDK about absurd, it's commonly stated that Discover charges more than Visa or Mastercard, though. I've always read that AMEX charges the most.

Seems dumb for the competitor with the smallest userbase to charge the most.

Highest rewards but highest merchant cost. Turned out to be a pretty bad model in the end

I think Amex's sales pitch to merchants probably revolved around their cardholders being particularly affluent or spendy customers, likely to spend more.

In the past they owned a big chunk of the corporate credit card space, so a business catering to business travelers pretty much had to accept Amex.

American Express generally charges the most. They get away with it with breaks for small businesses and arguing that Amex customers will spend substantially more in the shop when they come in.

Visa and Mastercard’s merchant fees vary depending on what card it is. For most cards issued through those networks, the fees are lower than AmEx’s but for the highest end Visa Infinite (like the Sapphire Reserve) the fees are higher than AmEx’s. According to the merchant agreement, if you the merchant take any Visa’s you have to take all of them.

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