Capital One’s $35 billion acquisition of Discover Financial Services cleared two major hurdles this week, winning approval from the Federal Reserve and the Office of the Comptroller of the Currency. With the merger expected to close by May 18, the ninth-largest U.S. bank is poised to join Visa, Mastercard, and American Express as one of the few players controlling both a card-issuing business and the payment rails themselves.
Capital One has long relied on Visa and Mastercard to process card transactions. By absorbing Discover’s 305 million cardholders and its payment network, the bank will no longer be a tenant in someone else’s ecosystem—it will be a landlord. Discover’s infrastructure will instantly add to Capital One’s already massive customer base of over 100 million users and offer new levers of control over interchange fees, data flow, and product design.
The banks’ argument is simple: this merger fosters competition. And in some ways, it does. Visa and Mastercard dominate payment processing, accounting for roughly 85% of the U.S. credit card network volume. A strengthened Capital One–Discover hybrid could pressure incumbents on innovation, pricing, and fraud security. But not everyone is convinced this is a win for the consumer.
Opponents, including the National Community Reinvestment Coalition, argue that the merger reduces choice and may lead to higher fees. Their concern is amplified by the fact that Discover was recently fined $100 million for overcharging on interchange fees from 2007 to 2023—a reminder that more vertical integration does not necessarily mean more consumer protection.
The Department of Justice, which had the authority to object on antitrust grounds, opted not to. Analysts see this as a signal that the post-2024 regulatory environment may be more permissive when it comes to bank consolidation. During the Biden years, the DOJ sought tighter scrutiny of bank mergers, particularly those that might reduce financial inclusion or affect access for unbanked individuals. But that tone appears to be changing.
The merger also underscores a broader trend: banks are seeking control not just over customer relationships but over the entire transaction pipeline. This is not just about cards—it is about data, margins, and the future of payment ecosystems.
With shareholders already on board and no further roadblocks in sight, Capital One is about to become the first major issuer to own its own card network since American Express. Whether this reshapes competition or simply reinforces existing power structures remains to be seen.