Capital One-Discover merger: Here's what it means for consumers and the Credit Card Competition Act
It's a giant banking merger that would create the nation's sixth-largest bank and have potentially significant implications for your credit cards. Capital One this week said it would purchase Discover Financial Services in an all-stock deal that would be worth some $35 billion. It would create the new largest credit card issuer in the world.
Related: The best credit cards for everyday spending
Capital One wants access to Discover's credit card portfolio and, perhaps more importantly, to own Discover's payment network. Discover has the fourth-largest payment network in the U.S. after Visa, Mastercard and American Express. Payment networks are how funds go from a merchant to a credit card issuer. Those networks enable digital monetary transactions and also come with fees ranging from as low as 1.5% to as high as 3.5% of the transaction. That's big business and a potential source of major profits for Capital One.
It could give Capital One the ability to lower fees and enable it to keep more of the profits from credit card transactions. It's also raising some concerns on Capitol Hill, where the deal would need to get signoff from federal regulators.
"I'm surprised we haven't seen someone try to buy Discover sooner," said Henry Harteveldt, a travel industry analyst and president of Atmosphere Research. "We've seen consolidation in a number of industries, and I'm not surprised Capital One would be interested in buying Discover to expand their protect portfolio and their reach and of course, grow revenues and profits."
So, what might this deal mean for your wallet? Here's what we know so far:
What will happen to my Discover or Capital One credit cards?
Not much should change for consumers in the short term. However, if the deal is approved, they may find that more merchants could take their Discover cards, especially internationally.
Capital One will push some of its credit cards to the Discover payment network. Capital One will want to dramatically expand its use of those networks to get a bigger revenue cut.
Capital One said it will continue to use the current Discover branding on Discover credit cards.
I suspect you'll see new credit cards introduced by both companies to maximize the benefits of a combination. While it's pure speculation at this point, we could eventually see more lucrative offers for some credit cards offered by the combined company to encourage more consumers to use its networks.
Indeed, some analysts believe the deal could be good for consumers. David Roberston, the publisher and owner of the industry publication the Nilson Report, told The Wall Street Journal that the deal could actually enhance rewards programs.
Related: Review of Discover it Miles credit card
But not everyone is convinced. "I am a little more circumspect," said Harteveldt in an interview with The Points Guy. "The possibility exists that consumers might be able to get more benefits, but there's also an argument to be made that you'll be reducing competition and reducing the need for these incentives."
Will the Discover and Capital One deal be approved?
Capital One said the deal could close as soon as the end of 2024, though the government may not love another merger of big consumer-touching banking companies.
The merger is already facing bipartisan opposition on Capitol Hill. Sen. Josh Hawley, R-Mo., is demanding the Biden administration block the deal. Sen. Elizabeth Warren, D-Mass., also opposes the deal, saying on X (formerly known as Twitter) that the merger "threatens our financial stability, reduces competition, and would increase fees and credit costs for American families."
However, similar deals have been approved in the past, so the federal government may let this one go through. There are arguments that the deal would actually be good for consumers because it would increase payment processing competition, with much of the market currently controlled by Visa and Mastercard.
What would the merger mean for the Credit Card Competition Act?
In fact, that's the heart of the argument some politicians are using to campaign for the Credit Card Competition Act, which they claim would force more competition into the credit card industry to lower the fees merchants pay when shoppers swipe their credit cards.
That law would amend the Electronic Fund Transfer Act to require credit card-issuing banks to offer at least two networks for merchants processing electronic credit card transactions.
Interchange fees — also known as swipe fees — are the most important revenue driver for credit card companies. Card companies set fees for merchants in exchange for consumers being able to use credit cards at those merchants. Businesses like corner stores and hotels are charged each time a consumer makes a purchase with a card.
Related: Protect Your Points campaign
Some will argue that a beefed-up Discover network would offer more competition for Visa and Mastercard, eliminating the need for tighter regulation.
We'll continue to weigh the ramifications of this megamerger and analyze what it means for "what's in your wallet."
Related reading:
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees