Capital One has secured approval from the Federal Reserve’s Board of Governors and the Office of the Comptroller of the Currency to acquire Discover Financial Services in an all-stock deal. The move would give Capital One a significant foothold in the US credit card market, surpassing its competitors such as JPMorgan Chase, Bank of America, and Citigroup.
As part of the approval conditions, Capital One must develop a plan to address outstanding enforcement actions against Discover Bank and ensure remediation of any harm caused. The acquisition would also provide Capital One with a new source of revenue from merchant fees, potentially increasing merchant acceptance rates for existing Discover customers.
However, this move could come at the cost of higher credit card interest rates for these customers, as Capital One typically caters to borrowers with lower credit scores. The Federal Reserve has imposed a $100 million penalty on Discover for overcharging interchange fees between 2007 and 2023.
The deal’s approval marks a shift in the Biden administration’s stance on mergers, which had previously been less favorable compared to the Trump administration’s more merger-friendly approach. With this acquisition, Capital One is poised to become the largest credit card company in the US.
Source: https://edition.cnn.com/2025/04/18/business/capital-one-discover-merger-conditional-approval/index.html