by Ben Dwyer You’ve probably seen the news: well-known CapitalOne is acquiring Discover in a multi-billion dollar deal.
But what does that mean for your business? Will customers still have and use Discover cards? Are your credit card processing fees going to change? At this point, we don’t know all the details, but here’s what you can expect with the current information.
The Discover Acquisition
CapitalOne announced its intention to acquire Discover in 2024, but didn’t receive regulatory approvals until April of 2025. Barring any unforeseen issues, the deal will close in mid-May of 2025.
For CapitalOne, the acquisition represents a chance to own a payments network. Coupled with its card-issuing capabilities, the new combined entity will handle more aspects of the entire credit card transaction cycle and make more money. CapitalOne will be similar to American Express in that sense. Amex both issues its own credit cards and provides the payment network to run those transactions, which is what CapitalOne will now do.
That means that the company will make money twice: once from the interchange fees that go to the card issuer and once from the assessment fees that go to the card network.
Not familiar with interchange and assessments? Check out this article on interchange basics.
CapitalOne claims that the merger will be good for the credit card industry, as it will increase competition. Increased competition can, in turn, lower fees or increase perks for users. With Visa and Mastercard dominating the market, a CapitalOne / Discover combined entity does present a more viable challenger to that domination.
Is CapitalOne keeping the Discover name and brand?
At least for now, yes.
According to a press release from CapitalOne, the company is not planning any immediate changes. The release further states that for any future changes, the company will communicate in advance with customers and provide comprehensive information.
It is likely that consumers will see their CapitalOne cards currently on the Mastercard network transition to the Discover network over time.
Does the acquisition affect my business?
Unless you don’t accept Discover cards, no. If you only take Visa and Mastercard, it’s worth revisiting whether to accept Discover. With CapitalOne a large player in the credit card market, you may start missing out on more sales if you don’t accept consumer’s preferred (or in some cases only) credit card.
Will CapitalOne set interchange fees?
Yes, but only for Discover transactions. Once CapitalOne and Discover merge, CapitalOne will have the ability to set the Discover interchange fees for transactions processed on the Discover network. Historically, Discover hasn’t published their interchange tables to the public. It’s unclear whether CapitalOne will continue that practice or increase transparency for businesses.
Note that CapitalOne will not set interchange fees for Mastercard, even if it continues to issue Mastercard-branded CapitalOne cards.
Effect on Rates and Fees
It’s unclear what changes CapitalOne may make with Discover’s current interchange rates and fees. Some experts speculate that the company could lower interchange rates and fees to entice more businesses to accept Discover and to make the company more appealing than Visa or Mastercard. However, the company has not stated any such plans, nor has it made any comments about increasing fees. Ironically, the news of the regulatory approval of the merger comes just days after the Federal Reserve fined Discover for allegedly overcharging businesses.
If you notice changes in your Discover rates and fees over the next year (higher or lower) let us know in the comments!
Stay Up to Date
To make sure you hear the latest info about the CapitalOne merger, be sure to bookmark this article and check back regularly. You can also check the CapitalOne/Discover merger website at CapitalOneDiscover.com
If you see anything different with your Discover rates and fees, be sure to let us know in the comments!
