{"id":2522,"date":"2024-03-04T16:12:20","date_gmt":"2024-03-04T16:12:20","guid":{"rendered":"https:\/\/friscotimes.org\/?p=2522"},"modified":"2024-12-13T22:14:11","modified_gmt":"2024-12-13T22:14:11","slug":"capital-one-is-merging-with-discover-heres-what-it-means-for-you","status":"publish","type":"post","link":"https:\/\/friscotimes.org\/?p=2522","title":{"rendered":"Capital One is merging with Discover: Here’s what it means for you"},"content":{"rendered":"\n

On February 19, 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.\u00a0<\/p>\n

\n

While the deal may impact consumers in the future, according to a Capital One press release it won\u2019t 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.<\/p>\n

\n
\n

How will the merger affect existing customers?<\/strong>\u00a0<\/h2>\n

Not much will change for now if you\u2019re a Discover or Capital One customer, but you should be aware of potential changes to your debit and credit cards or bank accounts.\u00a0<\/p>\n

Changing payment processing networks\u00a0<\/h3>\n

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.<\/p>\n

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.\u00a0<\/p>\n

Some companies act as card issuers and payment processing networks\u2014American Express and Discover do both.<\/p>\n

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\u2019s network starting in Q2 of 2025, according to an investor presentation<\/a> on February 20.\u00a0\u00a0<\/p>\n

\u201cOver 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,\u201d said Richard Fairbank, CEO of Capital One, on an investor presentation call. \u201cThis injection and volume in the network will help Discover be competitive with the leading network.\u201d<\/p>\n

While this change won\u2019t go into effect immediately, it may impact Capital One debit and credit cardholders down the line, specifically if they travel abroad.<\/p>\n

\u201cIn most cases in the U.S., Discover is more or less accepted everywhere that Visa, MasterCard, and American Express are,\u201d says Matt Schulz, chief credit analyst at LendingTree. \u201cWhere you may run into more issues is with international travel because Discover may not be as widely accepted.\u201d<\/p>\n

Higher fees and interest rates\u00a0<\/h3>\n

The merger could make the payment processing space more competitive: Visa and MasterCard currently dominate the space. This could benefit consumers because issuers would have to compete to provide better rewards on credit cards.\u00a0<\/p>\n

\u201cOne thing that will be interesting to watch is how the credit card rewards programs are blended together,\u201d says Schulz. \u201cCapital One will have to decide how they handle Discover miles and if they keep those two rewards programs separate or if they bring them together, and that decision will impact consumers.\u201d\u00a0<\/p>\n

However, there\u2019s also a possibility the merger reduces competition among issuers, leading to higher prices for consumers.\u00a0<\/p>\n

\u201cAnytime there\u2019s more consolidation and less competition, there\u2019s always the possibility for rates and fees to increase, but I don\u2019t see it being a huge issue,\u201d says Schulz.<\/p>\n

But new research from the Consumer Financial Protection Bureau (CFPB) found that larger credit card issuers charged higher interest rates and annual fees than smaller banks and credit unions. Why? Lack of competition among the largest credit card companies.<\/p>\n

\u201cAs we noted in 2023, the top 30 credit card companies represent about 95 percent of credit card debt, and the top 10 dominate the marketplace,\u201d states the CFPB report<\/a>.\u00a0<\/p>\n

If the merger goes through, Capital One would be the largest card issuer in the country based on outstanding credit card loans, beating out JPMorgan Chase.<\/p>\n

More physical locations<\/h3>\n

The merger would help expand the issuers\u2019 physical presence. For Discover customers, it means gaining access to physical bank locations. Currently, Discover has one brick-and-mortar location while Capital One has 259 branches and 55 Capital One Cafes.\u00a0\u00a0<\/p>\n

Customers of both issuers would also benefit from increased ATM access\u2014Capital One and Discover both rely on Allpoint and MoneyPass fee-free ATMs. Capital One boasts a network of more than 80,000 ATMs, while Discover has more than 60,000.\u00a0\u00a0<\/p>\n

The takeaway<\/strong><\/h2>\n

Capital One and Discover customers won\u2019t experience any changes for a while and approval of the deal hinges on whether it passes potential antitrust scrutiny from politicians and regulators. In the meantime, customers should focus on what they can control\u2014by shopping around and comparing financial products, customers can score better deals on credit cards and checking and savings accounts.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

On February 19, 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…<\/p>\n","protected":false},"author":369,"featured_media":2523,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[6],"tags":[1361,1977,593,3466,3465],"jetpack_publicize_connections":[],"yoast_head":"\nCapital One is merging with Discover: Here's what it means for you - Frisco Times<\/title>\n<meta name=\"description\" content=\"If the deal is approved, Capital One customers may see their cards moved to the Discover network by early 2025.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/friscotimes.org\/?p=2522\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital One is merging with Discover: Here's what it means for you - 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