Capital One to acquire Discover

[chiver78]

Ugh. I woke up to this news today. I hope this doesn't go through....

NY Times link

Capital One to Acquire Discover, Creating a Consumer Lending Colossus
The all-stock deal, which is valued at $35.3 billion, will combine two of the largest credit card companies in the United States.
Feb. 19, 2024

Capital One announced on Monday that it would acquire Discover Financial Services in an all-stock transaction valued at $35.3 billion, a deal that would merge two of the largest credit card companies in the United States.

“A space that is already dominated by a relatively small number of megaplayers is about to get a little smaller,” said Matt Schulz, chief credit analyst at LendingTree.

Capital One, with $479 billion in assets, is one of the nation’s largest banks, and it issues credit cards on networks run by Visa and Mastercard. Acquiring Discover will give it access to a credit card network of 305 million cardholders, adding to its base of more than 100 million customers. The country’s four major networks are American Express, Mastercard, Visa and Discover, which has far fewer cardholders than its competitors.

But consumer advocates pushed back on the possible deal, saying it posed antitrust concerns. “It is very difficult to imagine how federal regulators could allow Capital One to buy Discover given the requirement that mergers benefit the public as well as insiders,” Jesse Van Tol, the chief executive of the National Community Reinvestment Coalition, said in a statement.

*****click the link for the full column.

[TheOtherMe]

I prefer my Discover over my Capital One.  

[Rukh O'Rorke]

I was also dismayed.

[myrrh]

I switched my online savings account from Capital One to Discover several years ago, partially because at the time Capital One didn't allow you to designate a beneficiary of your account. I think they finally started allowing that a couple of  years ago. Plus the Capital One 360 Savings rate vs the Capital One 360 Performance Savings rate thing seemed pretty underhanded to me. 

Anyway I too hope this doesn't happen.

[chiver78]

Discover is where I have a "throwaway" checking account, to fund the debit card that lives in my phone wallet. I've also got 2 of their CCs still open. one is carrying a promotional balance transfer. but I had a bad experience with CapOne way back in college, and I refused to do any more business with them. Discover, OTOH, has been amazing in every interaction. I'd hate to see them go downhill like CapOne. 

[TheOtherMe]

I have not had issues with Capital One.  One reason I like them is no foreign transaction fees.  The other reason is when I was at my absolute financial worst, they allowed me to do a secured credit card.  After a year, they converted it without me asking to a regular credit card.  

They have always been very good when I have lost my card as has Discover.  Cats grab hold of cards if they get the opportunity and I find them months later when I move a piece of furniture.

Discover is actually by far the highest % APR credit card I have.  It's not even close.  They are at store card levels.

I feel like both companies have treated me well.  For some reason, I do favor Discover.  I know not every place accepts Discover just as not every place does not accept Amex..

[chiver78]

some more coverage of this deal...

NBC link


Feb. 20, 2024, 7:02 PM EST

By J.J. McCorvey

Capital One’s $35.3 billion deal to buy Discover is a long way from being completed.

But consumer advocates and some lawmakers are already raising questions about how the proposed merger could affect credit-card users — many of whom are already under pressure from high interest rates and record debts.

Sen. Elizabeth Warren, D-Mass., a longtime proponent of tighter financial regulation, called for federal officials to block the deal.

“The merger of @capitalone and @discover threatens our financial stability, reduces competition, and would increase fees and credit costs for American families,” Warren, who is also the chair of the Senate Banking Subcommittee on Economic Policy, posted on X.

“We should be worried about the functionality of the credit card market in general. This merger probably heightens that,” said Adam Rust, director of financial services at the Consumer Federation of America, a national network of consumer advocacy groups.

Industry groups and experts warned against a shrinking credit card market dominated by a handful of large players, which they said are more likely to squeeze customers.

****click the link for the full column. 

[jerseygirl]

WSJ had an opinion piece on this today. Possibly increasing competition for CCs. Now great majority are visa master card and more competition might lower merchant fees


So opposite opinion than E Warren

[chiver78]

there was a comment further down the article, not from Warren - 

“Consumers would always rather have more options, because more competition is generally better,” said Matt Schulz, chief credit analyst at LendingTree. But “if Capital One sees that there’s a bunch of overlap between what they have and what Discover brings to the table, and they want to combine the two instead of keeping them as separate brands, you could end up seeing some of those offers get reduced,” he said.

[TheOtherMe]

Always like the competition.  More is better than less in this situation.  

[minnesotapaintlady]

I wonder if this has anything to do with the absolute deluge of Discover credit card mailers I've been getting lately?  It's been insane.  Between my son and I we probably get 3 to 4 a week from them.  I typically get no mail at all but the last couple months Discover has been nutso.

[TheOtherMe]

Same here for snail mail from Discover.  I also get the mail for NIL in Toronto for her Discover.  So I get duplicates of everything.  

[Cookies Galore]

Both my husband and I have had zero issues with our Capital One cards and we've had zero issues with our performance savings accounts, but that doesn't mean I want this deal to go through. Less competition for consumers is not a good thing.

[Tiny]

Feb 21, 2024 13:21:32 GMT -5 jerseygirl said:

WSJ had an opinion piece on this today. Possibly increasing competition for CCs. Now great majority are visa master card and more competition might lower merchant fees


So opposite opinion than E Warren

How will that work?   Will Discover become a "Visa"?     The problem with Discover cards is that not all "merchants" accept them because they have to pay to accept them. Just like they have to pay to accept Visa and MasterCard.         Well, that's how I think it works.      It's the same reason not everyone accepts AmEx cards.   

Isn't part of the problem that "merchants" need to pay to accept  all 3 types of cards (4 if you include AmEx).   I'm sure lots of small businesses opt to pick one or two to pay for so they can accept credit card payments.    Maybe this is where paypal/venmo/zelle  comes in?   but there's a cost for that as well for a business.  

I think Visa is the most popular card.   

[Tiny]

Where is the "competition" for credit cards?   Is it between banks/institutions offering them?  or it at the "visa/mastercard/Discover/American Express" level 

[jerseygirl]

Feb 22, 2024 9:32:30 GMT -5 Tiny said:

Feb 21, 2024 13:21:32 GMT -5 jerseygirl said:

WSJ had an opinion piece on this today. Possibly increasing competition for CCs. Now great majority are visa master card and more competition might lower merchant fees


So opposite opinion than E Warren

How will that work?   Will Discover become a "Visa"?     The problem with Discover cards is that not all "merchants" accept them because they have to pay to accept them. Just like they have to pay to accept Visa and MasterCard.         Well, that's how I think it works.      It's the same reason not everyone accepts AmEx cards.   

I think Visa is the most popular card.   

No opinion piece says Discover /capital one will become bigger and compete with visa and master card. More competition may lead to lower fees to merchants

[chiver78]

Feb 22, 2024 9:32:30 GMT -5 Tiny said:

Feb 21, 2024 13:21:32 GMT -5 jerseygirl said:

WSJ had an opinion piece on this today. Possibly increasing competition for CCs. Now great majority are visa master card and more competition might lower merchant fees


So opposite opinion than E Warren

How will that work?   Will Discover become a "Visa"?     The problem with Discover cards is that not all "merchants" accept them because they have to pay to accept them. Just like they have to pay to accept Visa and MasterCard.         Well, that's how I think it works.      It's the same reason not everyone accepts AmEx cards.   

I think Visa is the most popular card.   

I've been reading the opposite - that Capital One cards will become Discovers

[chiver78]

Feb 22, 2024 9:36:17 GMT -5 jerseygirl said:

Feb 22, 2024 9:32:30 GMT -5 Tiny said:

How will that work?   Will Discover become a "Visa"?     The problem with Discover cards is that not all "merchants" accept them because they have to pay to accept them. Just like they have to pay to accept Visa and MasterCard.         Well, that's how I think it works.      It's the same reason not everyone accepts AmEx cards.   

I think Visa is the most popular card.   

No opinion piece says Discover /capital one will become bigger and compete with visa and master card. More competition may lead to lower fees to merchants

Capital One cards are already MC-branded. I don't understand your statement here. 

[Tiny]

Feb 22, 2024 9:36:17 GMT -5 jerseygirl said:

Feb 22, 2024 9:32:30 GMT -5 Tiny said:

How will that work?   Will Discover become a "Visa"?     The problem with Discover cards is that not all "merchants" accept them because they have to pay to accept them. Just like they have to pay to accept Visa and MasterCard.         Well, that's how I think it works.      It's the same reason not everyone accepts AmEx cards.   

I think Visa is the most popular card.   

No opinion piece says Discover /capital one will become bigger and compete with visa and master card. More competition may lead to lower fees to merchants

So, Capital One is going to offer much lower fees to get  "merchants" to accept Discover cards and to make accepting Discover more "acceptable" - but the merchants will still need to pay to accept Visa (and maybe Mastercard).       Cap One is gonna need to flood the market with Discover cards...   won't this most likely hurt small businesses - when they can't accept their customer's Shiny New Discover card?? 

   

[jerseygirl]

Feb 22, 2024 9:40:58 GMT -5 chiver78 said:

Feb 22, 2024 9:36:17 GMT -5 jerseygirl said:

No opinion piece says Discover /capital one will become bigger and compete with visa and master card. More competition may lead to lower fees to merchants

Capital One cards are already MC-branded. I don't understand your statement here. 

Didn’t know capital was a MC

[TheOtherMe]

Capital One cards also have no foreign transaction fees.  My Discover card does have foreign transaction fees.  It the Capital One card becomes a Discover card that will not make me happy,