Capital One Financial Corporation is set to finalize its $35.3 billion acquisition of Discover Financial Services on May 18, 2025, following the recent approval from U.S. banking regulators. This merger will establish the combined entity as the nation's largest credit card issuer by balances and the eighth-largest bank by assets.

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) granted final approvals for the acquisition in April 2025, concluding a comprehensive review process. The Federal Reserve imposed a consent order and a $100 million fine on Discover for fee overcharges spanning from 2007 to 2023. Additionally, the Federal Deposit Insurance Corporation (FDIC) levied a separate $150 million penalty. The OCC's approval is conditional upon Discover addressing underlying issues in prior enforcement actions.

In July 2024, Capital One announced a five-year, $265 billion community benefits plan in connection with the acquisition. This plan focuses on affordable housing, small business growth, and financial well-being, aiming to expand economic opportunity for underserved consumers, including those in low- and moderate-income neighborhoods, rural areas, and communities of color. The plan includes significant financial and programmatic commitments across community development, Community Development Financial Institutions (CDFIs), philanthropy and pro bono, consumer card and auto lending, small business and supplier diversity, and bank access.

The merger has faced opposition from various stakeholders. U.S. Senator Sherrod Brown, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, urged regulators to thoroughly consider all aspects of the proposed merger, emphasizing potential impacts on workers, consumers, and communities. He highlighted concerns about job losses, reduced consumer choice, and increased systemic risk. Small business groups have also expressed apprehension, warning that the merger could hurt competition and increase the outsized power of big banks and dominant credit card companies. They argue that the consolidation may lead to higher credit card interchange fees, which are already a significant expense for small businesses.

The merger is expected to significantly impact the credit card and payment processing markets, enhancing competition against industry leaders. By combining their resources, Capital One and Discover aim to create a more robust payments network capable of competing with giants like Visa and Mastercard. This consolidation is anticipated to lead to cost savings and increased efficiencies, benefiting both consumers and merchants.

This acquisition marks one of the largest deals in the credit card sector globally. It is also the most substantial banking merger in over five years and one of the largest since the 2008 financial crisis.

As the May 18 closing date approaches, the financial industry and consumers alike are closely watching the developments of this landmark merger, which is poised to reshape the U.S. credit card industry and banking sector.