The Capital One and Discover Merger Will Not Affect Customers, at Least Not Yet

Capital One and Discover will soon become one enormous credit card company. While government regulators signed off on a deal that proposed a merger between Capital One and Discover, customers will largely be unaffected for now.

“This is an exciting moment for Capital One and Discover,” said Capital One CEO Richard Fairbank in a press release. “We understand the critical importance of a strong and competitive banking system to our customers and our economy, and we appreciate the thoughtful and diligent engagement of our regulators as they thoroughly reviewed this deal over the past 14 months.”

For now, customers of both Discover and Capital One won’t see any changes to accounts, including the same respective contact numbers and websites. There’s a good chance that most account holders won’t even know that the merger is happening. However, once the deal closes, which is expected sometime next month, Capital One and Discover will send out notices regarding any account detail changes.

With the extensive payment network of Capital One, Discover customers may notice a wider card acceptance rate among merchants. Yet, Capital One also regularly approves credit cards for subprime borrowers, i.e., consumers with credit scores in the 600s, which could lead to a potential increase in interest rates for current account holders.

The Capital One and Discover Deal

In an all-stock offer, Capital One proposed a merger with Discover over a year ago. However, creating a credit card company of such magnitude requires government scrutiny.

The Federal Reserve’s Board of Governors and the Office of the Comptroller of the Currency (OCC) dissected the details of the merger proposal. The two agencies ultimately gave their approvals, but with some conditions attached.

Discover must pay a $100 million fine levied by the Federal Reserve “for overcharging certain interchange fees from 2007 through 2023.” The creditor is in the process of repaying affected customers. Meanwhile, Capital One must implement a plan to resolve the “root causes of any outstanding enforcement actions against Discover.”

The government watchdogs approved the deal despite another agency’s unresolved allegations against Capital One. Earlier this year, the U.S. Consumer Financial Protection Bureau accused Capital One of defrauding customers out of more than $2 billion.