Discover Financial Services, facing the necessity for further funding while income is decreasing and credit card charge offs are increasing, received only a unenthusiastic response from the equity market as a public offering last week of its average shares had to be priced at a 12 percent reduction to the market.

Right now there is a outstanding mass of risk aversion when it comes to credit cards, said Dan North, chief economist at Euler Hermes ACI, a trade credit insurance firm.

The credit scare started last fall. As a result, people have commenced utilizing their credit cards less, meaning less interchange profit from transactions. The credit card firms have also become protective, chiseling credit lines, increasing fees and modifying interest rates from fixed to fluctuating, both in response to the need for more revenue now and to prepare for the restrictions from the Credit Cardholders Bill of Rights, which goes into effect next year.

According to North, Discover cardholders have weaker credit ratings, on a whole, than holders of MasterCards, Visas and American Express cards, though those companies are battling the same financial challenges.

All of those factors have also made it difficult for a new competitor in the market, Revolution Money, a payment platform complete with credit card and money transfer service designed to compete with major card companies Visa, MasterCard, Discover and American Express. Revolution LLC, headed by AOL founder Steve Case, had hoped to compete mainly by offering better security through a chip-based card and lower interchange fees to merchants.

A group of niche players that are acquiring more traction now, according to a Scripps Howard News Service report, is peer-to-peer lending (P2P), which effectively avoids traditional financial institutions. P2P lending services bundle pledges from individual investors and offer small loans to other individuals at attractive rates, a model that could evolve into direct competition for credit cards.