Cap One gets final OK to acquire Discover

Capital One received the go-ahead from the Federal Reserve and the Office of the Comptroller of the Currency to acquire Discover, at a cost of $35 billion. The move could mean the end of the credit card duopoly that has been a crook in the craw of merchants and the U.S. Department of Justice for decades.

The regulatory approvals follow a ruling by the DOJ on April 3, 2025, that it did not find sufficient competition concerns to block Capital One's proposed acquisition of Discover Financial Services. This communication effectively signaled the DOJ's decision not to oppose the merger.

The transaction had also been approved by the Delaware State Bank Commissioner, in December 2024, and by shareholders of more than 99 percent of each company's voting shares in February of this year.

Once the deal officially closes, which is expected in May 2025, the combined entity will be the largest U.S. credit card issuer in terms of card balances, at roughly $250 billion.

"The combination of our two great companies will increase competition in payment networks, offer a wider range of products to our customers, increase our resources devoted to innovation and security, and bring meaningful community benefits," said Michael Shepherd, interim CEO and president of Discover.

No immediate changes

The companies, in a press release, said there will be no immediate changes to Cap One and Discover customer accounts and relationships. Cap One will provide customers with comprehensive information regarding relevant conversion activities well in advance of any future changes, the companies stated Until then, customers will continue to be served through their respective Cap One and Discover communications channels.

"Upon closing, Capital One will begin implementation of its historic five-year Community Benefits Plan, developed in connection with the acquisition and partnership with leading community organizations, mobilizing more than $265 billion in lending, investment, and services to advance economic opportunity and financial well-being across America," the companies stated in their joint press release.

End of card network duopoly?

But the big news may have been in a video posted by Cap One of Richard Fairbank's take on the acquisition. Fairbank was a co-founder of Cap One and is the company's CEO and chairman of the board. Fairbank also served a two-year stint on the Mastercard board of directors, from 2004 to 2006.

"This is a valuable and rare asset," Fairbank said. "I have admired Discover for many years. For four decades they have built a global payments network that connected merchants, small businesses and consumers in the U.S. and around the world."

"This deal," Fairbank added, "accelerates our long-standing journey to work directly with merchants to leverage our customer base, technology and our data to drive more sales for merchants, and greater deals for consumers and small businesses."

Discover is only one of four payment networks in the United States competing alongside Visa. Mastercard and American Express, and ranks fourth behind those three. Yet, like Visa and Mastercard, and unlike AmEx, Discover owns an open loop ATM network, Pulse.

This could put a pause in the ongoing battle that has pitted merchants against Visa and Mastercard over interchange and network choice.

Cap One's differentiator

The deal also creates a key differentiator for Cap One vis-à-vis other card issuers, in that it will be the only card issuer (lender) to also own a transaction processing network.

As a card issuer that owns a transaction processing network, Cap One will also earn a larger share of the money associated with card transactions. Not only will it collect network fees and interchange, the bank will also earn money on credit card balances.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.