Capital One Completes $35.3 Billion Acquisition of Discover, Becoming Largest US Credit Card Issuer

On May 18, 2025, Capital One Financial Corporation completed its $35.3 billion all-stock acquisition of Discover Financial Services, establishing the largest U.S. credit card issuer by loan volume. This landmark merger combines Capital One's extensive customer base with Discover's proprietary payment network, positioning the new entity to challenge industry leaders Visa and Mastercard.

The merger received final regulatory approvals from the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) on April 18, 2025. These approvals were contingent upon Capital One's commitment to address Discover's previous compliance issues, including a $100 million fine for overcharging certain interchange fees between 2007 and 2023. Shareholders of both companies overwhelmingly approved the merger in February 2025, with over 99% voting in favor.

By integrating Discover's payment network, the combined entity aims to reduce reliance on third-party processors and compete more directly with Visa and Mastercard. This strategic move is expected to enhance competition in the payment networks sector, offering a wider range of products to customers and increasing resources devoted to innovation and security.

Consumer advocates have expressed concerns that the merger could lead to reduced competition, potentially resulting in higher fees and interest rates for credit card users. A coalition of 30 community, consumer, civil rights, and public interest groups questioned the merger, and Senator Elizabeth Warren predicted that it would "increase fees and credit costs for American families." The Consumer Financial Protection Bureau (CFPB) found that larger banks tend to charge higher interest rates; for instance, large institutions charged customers with good credit scores an average of 28.20% interest, compared to 18.15% for smaller banks. This raises concerns that the merger could lead to higher costs for consumers.

This merger marks one of the most substantial banking consolidations since the 2008 financial crisis. While the banking industry has seen various mergers and acquisitions over the years, the scale and impact of the Capital One-Discover merger are particularly noteworthy. The combined entity now controls $637.8 billion in assets, encompassing 2.2% of the nation’s insured deposits. This consolidation reflects a strategic shift in the financial services industry, aiming to create more competitive entities capable of challenging established market leaders.

As the integration process unfolds, stakeholders will closely monitor the merger's impact on the credit card industry, consumer costs, and the broader financial landscape. The success of this consolidation will depend on the combined entity's ability to deliver enhanced services while maintaining fair and competitive practices in the evolving financial sector.