Discover’s Deal of the Year and the New Gift Card Exclusion

Apple Pay Promo

You’ve surely heard about Discover’s offer to get 10% back on all Apple Pay purchases until year’s end and how it would be possible to get up to $2200 or more in cashback by utilizing the offer.

Gift Card Exclusion

FrequentMiler reports that Discover has now added a gift card exclusion into the terms and they won’t give the cashback on any gift cards. The exclusion was now added to the FAQ:

Apple_Pay_Frequently_Asked_Questions___Discover

Not only are Visa gift cards under the exclusion, but even merchant gift cards are being said to be excluded.

This is terrible news because it will be much more difficult to take advantage of this offer as it limits us to physical goods.

Will it be enforced?

The $2000-question is whether the gift card exclusion will actually be enforced.

How would they even know what you bought to be able to start excluding the gift cards? Well, there is a concept of Level 3 Processing which tells the card issuer the exact items that were purchases, see Does A Credit Card Issuer Know What Items You’re Purchasing? We noticed, for example, that Amex knows exactly what items you purchase from Staples and it even shows up clearly in your online login.

Remember that we don’t know if Discover has Level 3 Processing at all. Even if they do, it’s unlikely that they have it with all merchants. If they don’t have the exact data on what was purchased, there’s no way the system can withhold the 10% cashback from being credited.

For what it’s worth, I chatted with Discover about this; here’s an exact quote of the conversations:

Me: I am reconciling my spend now and I’m trying to figure out what items were purchased on my Discover card a while back. Does Discover have access to that info? Or do you just see the amount without data on what was purchased?

Discover Rep: Thank you for contacting me about purchase information on your Discover account. I can confirm that we do not have information on what exactly was purchased. We only have the name of the merchant, amount of purchase, and date.

Me: So there would be no way for you to verify exactly what was purchased? I’ve heard of Level 3 Processing that some card issuers do which gives exact data. Does Discover use Level 3 Processing?

Discover Rep: We do not have information like that for your purchases. I would recommend contacting the merchant directly.

To be clear, I don’t trust every Discover rep to know exactly what info is transmitted and what isn’t, but in the case of Amex the info is clearly visible and isn’t a secret so hopefully if the Discover reps can’t see it their system can’t either.

Here’s a look at how a gift card purchase at a gas station shows up in my Discover account:

Discover_Card__Year-to-Date_Summary

It’s also worth noting that – via Flyetalk – the original terms did not mention the gift card exclusion, this was added afterward. That makes me more optimistic that the added exclusion is just meant as a deterrent and won’t actually be enforced in any way.

What to do now?

Within a couple of weeks, we should know more on whether it’s being enforced or not. Discover’s cashback doesn’t always post for the last week-or-so of the month until the following statement so we may have to wait some time to find out more.

The one thing that worries me is that even if it’s not system-enforced, which is my guess, they could start manually reviewing accounts. It’s never good to have manually reviewed accounts and it could be a red flag to have huge amounts of spend on the account.

Ultimately, it’s important to remember that the deal is a great one even for ordinary purchases, but since Apple Pay has limited acceptance it is hard for many of us to take advantage of it that way. Those who do merchandise reselling may be able to make $10,000 in purchases of resalable physical goods and make use of the offer that way.

One other interesting question remains with in-app purchases with Apple Pay. Officially only in-store purchases are included in the promo, not in-app purchases, but there is a chance it will work. If it does, that would open up a new front of possibilities of how to make use of this promo for ordinary purchases. For example, you would be able to pay your rent with Radpad using Apple Pay and get 22% back! Once again, in-app purchases are officially excluded in the terms and probably won’t work, but with gift cards becoming a gray area it’s worth checking out our options.

List of Stores that Accept Apple Pay 

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Chuck
Chuck (@guest_194102)
November 6, 2015 02:33

Still can’t believe they can see the gc’s mixed in with other purchases. Also received the one time courtesy email, although I received several of them since I went to a couple of Walgreens the first day I could. At least I spent $2500 that first day. Should’ve bought the whole $10k

Parkerthon
Parkerthon (@guest_194163)
November 6, 2015 08:13

I haven’t received any notification or email on either card. 12k in wag vgcs only. Only 1% so far. Not looking good based on these reports though. 🙁

Mike
Mike (@guest_194062)
November 6, 2015 00:26

I receive a message from Discover letting me know that the gc portion of my purchase,200 out of 275 at Walgreen ,dont know how they know. But yeah they refuse me the 10% cashback, and ask me for a receipt if im not satisfied.

Radster
Radster (@guest_194064)
November 6, 2015 00:30

Did you contact Discover about this transaction? Or did you receive their email unsolicited?

Mike
Mike (@guest_194067)
November 6, 2015 00:36

no i didnot contact them,just received another message telling me they awarded me my 1st 2gcs,purchased same time b4 the gc term,as a onetime courtesy.

Radster
Radster (@guest_194068)
November 6, 2015 00:40

Wow! They appear to have access to fully itemized data. Some others are reporting partial 10% CB on mixed purchases

Mike
Mike (@guest_194069)
November 6, 2015 00:45

im surprise too,they did see the gc in my mix purchase

Suljaga13
Suljaga13 (@guest_193519)
November 4, 2015 15:40

I got my Discover statement today. So far i only got $3.50 cash back in apple promo. This is for walgreens purchase $35.00 back in september. I had two more gift catd purchases from Wallgreens before this one. No cash back on gift card purchase for me. Both purchases were over $500. In addition to this cashback i also received 1% back from all purchases. I mainly bought paypal cash gc, so i still come ahead with 2% cashback from Discover.

John
John (@guest_190048)
October 26, 2015 10:09

Just got the statement for one of my discover cards. The transaction clearly states Apple Pay as the payment method but I only received 1% cash back.

John
John (@guest_190247)
October 26, 2015 18:56

Discover’s secure message center confirmed the promotion and that it is considered additional cash back that will post within 8 weeks. They reiterated that gift cards were excluded but did not appear to know what I purchased.

ABL
ABL (@guest_185512)
October 14, 2015 12:22

Subscribe, dying to see how this turned out for folks.

Suljaga
Suljaga (@guest_185494)
October 14, 2015 11:25

Has anyone received the 10% on any in store purchases with apple pay. I had 6 x $500 vgc instore purchase with apple pay as well some minor charges. So fat i received only the 1% cash back on these. I wonder is there delay for 10% cashback or something. Please share any info.

Mike
Mike (@guest_194065)
November 6, 2015 00:30

they do know you purchase giftcard,and they will not reward the 10% cashback on gc portion,denied me 10% cashback on 200$ gc.

Eric
Eric (@guest_181060)
October 5, 2015 14:22

Parkerthon, did you just rent the iPhone for a couple of days? If so, is that why you were in such a hurry to get the $10K done?

Parkerthon
Parkerthon (@guest_181173)
October 5, 2015 21:14

No, but I just got a new 6s via AT&T access more card promo, yay.

I was in a rush because my month was going to be crazy demanding with work and that started today. I have 3 discover cards to hit spend on total and can only easily liquidate 10k mo so I rushed this month. Also I’m concerned my local wags won’t handle the demand surge well when and if it becomes clear discover doesn’t actively discriminate.

Eric
Eric (@guest_181192)
October 5, 2015 22:02

How did you manage to get 3 Discover cards? Is 1 of them from someone else?

Parkerthon
Parkerthon (@guest_182249)
October 7, 2015 18:37

Yes, wife just got one. Was approved for 3.5k other day. Might be a little tricky/risky spending 10k on that but 1.5x CL over a couple month should hopefully be okay.

Parkerthon
Parkerthon (@guest_185532)
October 14, 2015 13:17

Well if Discover does recognize GC’s, I’ll be glad I rushed this month. RIP Redbird. 🙁

Parkerthon
Parkerthon (@guest_180794)
October 4, 2015 16:48

Well I threw caution to the wind and hit this hard. I’m convinced Walgreen’s will get rushed if the cashback shows and shutdown tap pay for VGC’s before Discover takes adverse action. I haven’t used my new Discover except for VGC’s. I had twenty 504.95 charges in two days. If Discover is actively looking to shut customers down or deny cashback it’ll be me for sure. Will keep everyone posted on results although my first statement won’t close till 16th. Fingers crossed I didn’t waste an entire month of MS but those are the risks I suppose.

Carl
Carl (@guest_180800)
October 4, 2015 17:01

Whoa… You got some brass ones! I am rooting for you and watching too. Holding off until I know what works.

Eric
Eric (@guest_180841)
October 4, 2015 20:11

Did you do that all at the same store? I’m surprised you were able to buy so many in only 2 days. It’s even more shocking that Discover let all of those purchases through without a fraud alert.

Parkerthon
Parkerthon (@guest_180850)
October 4, 2015 21:20

Oh I got an alert about 4k in. I made the rounds two days in a row. Hit up 10 WAG’s each day and finished the loop with Target. Took me about 3 hours each day. Here’s to hoping it pays off. Researching today, guess I won’t know till end of this month, early next, before the real early bird people finally start reporting the 10% offer success/fail which according to the offer terms is delayed post of 1-2 cycles after your statement the spend was in closes.

anthonyjh21
anthonyjh21 (@guest_180857)
October 4, 2015 21:44

Not really. With all due respect, people keep missing the obvious point that Discover already has a precedence for clawbacks. They did it on smaller transactions in the past so this one is an easy justification for manual review regardless of level 3 access. There’s already a precedence with issuers wanting copies of receipts too, with Ritz Carlton.

I’d hope that anyone going for it with gift cards is setting aside the funds for the next year or so in the event you’re manually reviewed and receive a call from a manager with Discover.

Parkerthon
Parkerthon (@guest_180889)
October 4, 2015 23:40

Yeah, there’s always a risk of clawbacks, manual reviews etc, but I have done a lot of research on the instances where it has happened and feel it’s low in this case. My research says Discover clawing back was the cashback portal and people double dipping for reselling to the tune of 3k in cashback every month. The proof of receipts with Chase RC I’m assuming is regarding the airline incidental credit? I’m not sure that applies here. And if you want to look historically, long and short of it, 1k in cashback is hardly extreme(even year end total of 2k). Frankly, if you want to talk about precedent, you could rack up the 2.5k cashback on Amex Old Blue Cash year in and out and nobody will bother you. Obviously I can’t be certain and this may be a time I get burned, but with risk there’s reward here. I would not meet the 10k/card spend using normal means given the limiting selection of retailers that take apple pay.

Sarwar
Sarwar (@guest_180227)
October 2, 2015 20:54

Subscribe

Jason
Jason (@guest_180120)
October 2, 2015 14:17

Just noticed that Discover can see the “Sales Tax Amount” in each transaction done by ApplePay.
So technically it’s not so difficult for them to distinguish taxable items and non-taxable items(Gift Cards).

anthonyjh21
anthonyjh21 (@guest_180127)
October 2, 2015 14:45

That’s an interesting point. Did you find this on your own or did you come across it on another site/blog? Would love to know more.

You could still make an argument that your $500+ purchase was that of non-taxable items such as food. Although I don’t know if you could realistically justify a couple thousand dollars of such items, especially at a store like Walgreens.

Eric
Eric (@guest_180128)
October 2, 2015 14:46

How do you know this? There is no tax on most food items either so I don’t think it’s that big of a deal. A $500 non-taxable item would kind of give it away if they could see it line by line.

Jason
Jason (@guest_180263)
October 2, 2015 23:09

To be more specific, the “Sales Tax Amount” showed up under my staples transactions.

Eric
Eric (@guest_180264)
October 2, 2015 23:16

Are you talking about on your Staples receipt or on your Discover statement?

Jason
Jason (@guest_180404)
October 3, 2015 10:34

my Discover, Recent Transactions

Eric
Eric (@guest_181028)
October 5, 2015 11:42

Maybe Staples has a more advanced level of reporting? I just checked my Recent Transactions and sales tax is not listed there for any of them. My BP purchase does show the amount of gallons and per gallon price. I’m guessing if someone bought a gc in BP that would be obvious to Discover.