3 reasons Capital One Buy Discover is good news for credit card customers

Capital One made big news in the credit card industry when it announced on February 19, 2024 that the company would acquire Discover® for $35.3 billion. Capital One’s acquisition of Discover is still in its early stages, and no one knows exactly what the product changes will look like. But there’s reason to be hopeful that this deal could be good news for credit customers, not just Capital One and Discover cardholders, but anyone who uses a credit card.

Let’s take a look at some reasons why buying Discover from Capital One could be good for your wallet.

1. Discover is not going away

If you’re a Discover customer and love Discover’s unique offerings like cashback rewards on debit card purchases, don’t worry. Discover isn’t going away. Capital One has already said it plans to keep the Discover brand.

Don’t assume your Discover card will change in a “bad” way. Capital One will likely continue to offer the same features and benefits Discover customers love. Current customers of Discover do not need to take any action at this time. Just sit back and continue using your Discover banking products as usual.

2. Capital One cards can earn you more “rewards.”

By acquiring Discover, Capital One isn’t simply acquiring a credit card company; it’s acquiring Discover’s payments network. There are four large payment networks for credit and debit cards. Visa and Mastercard are the top two, American Express is third, and Discover is fourth. Purchasing Discover’s payments network will give Capital One additional financial flexibility behind the payments system, allowing it to make more money and potentially provide better rewards to Capital One customers.

No one knows exactly what kind of new products or rewards cards Capital One may offer as a result of purchasing Discover. However, some ideas might include:

Discover Style Rewards Debit Card

Purchasing Discover’s payments network will allow Capital One to tweak some of the most customer-friendly features of the Discover debit card. The same types of cash back rewards that Discover currently offers may also be available to Capital One customers in the future.

A better premium rewards card

If Capital One is saving money and making more money by owning its own payments network, that could mean better rewards for its best customers. Capital One already ranks highly among the best rewards credit cards. Buying Discover (and its payment network) can turn the Capital One credit card into an even better deal for savvy shoppers.

Better benefits when shopping with select merchant partners

Capital One said it wants to use Discover’s payments network to work more closely with merchants (retailers, restaurants and other stores) to offer better benefits and experiences. This could mean better customer loyalty programs, special offers from your favorite brands, and more.

3. Better deals from Visa and Mastercard

By purchasing Discover’s payments network, Capital One will bring more competition to Visa and Mastercard. Capital One has already announced plans to move all of its debit cards to the Discover payments network (so if you have a Capital One Mastercard debit card, you’ll see the new logo soon).

Capital One may continue to work with Visa and Mastercard, but it no longer needs to. That means Visa and Mastercard will have to tighten up their deals behind the scenes to ensure Capital One wants to continue offering credit cards through its payments network.

Good news for credit card customers, right? As larger payment networks like Visa and Mastercard face more competition, they may be able to offer more rewards to credit card customers like you. Capital One customers will get a better deal through this, but Visa and Mastercard may be incentivized to offer better features, perks and rewards to other credit card companies as well. This deal could be good news for a variety of customers, not just those who use Capital One credit cards.

conclusion

The deal is not yet complete and could be blocked by federal regulators. The Federal Trade Commission (FTC) may decide that Capital One’s acquisition of Discover would make the credit card company “too big.” If regulators determine that combining the two credit card companies into a much larger company would result in anticompetitive (monopolistic) business practices that harm consumers, the federal government could file a lawsuit to stop the deal.

But if this purchase deal goes through, Capital One’s newly acquired payments network could create new competition from the largest players (Visa and Mastercard) and provide new opportunities for new products and better benefits for customers. There are some hopeful signs that Capital One’s acquisition of Discover could actually be good news for everyone who uses credit cards.

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