Capital One announced it would acquire Discover in an all-stock transaction worth $35.3 billion. Both companies are among the largest credit card issuers in the country while Capital One is the ninth-largest bank in the United States. While the deal may impact consumers in the future, according to a Capital One press release it won’t close until later this year or early 2025. For now, the companies are awaiting approval from regulators and shareholders, with the deal already attracting scrutiny from policymakers with both major political parties. How will the merger affect existing customers? Not much will change for now if you’re a Discover or Capital One customer, but you should be aware of potential changes to your debit and credit cards or bank accounts. By acquiring Discover, Capital One will own one of the biggest payment-processing networks in the country, competing against three larger networks: Visa, MasterCard, and American Express.
You can think of a payment processing network as a middleman between the merchant and card issuer. Whenever you make a purchase, the card issuer provides you with the card and the upfront money to fund the transaction while the payment network is the infrastructure supporting it.
Some companies act as card issuers and payment processing networks—American Express and Discover do both.
Currently, Capital One relies on the Visa and MasterCard networks for payment processing, but it plans to move all of its debit cards and some of its credit cards to Discover’s network starting in Q2 of 2025, according to an investor presentation on February 20.
“Over time, we will move a growing portion of the credit card business to the Discover network. In total, across debit and credit, we expect to add over 25 million Capital One cardholders and over $175 billion in Capital One purchase volume by 2027,” said Richard Fairbank, CEO of Capital One, on an investor presentation call. “This injection and volume in the network will help Discover be competitive with the leading network.”
While this change won’t go into effect immediately, it may impact Capital One debit and credit cardholders down the line, specifically if they travel abroad.This article originally appeared in Fortune magazine.
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