Capital One and Discover: The Potential to Build a Global Payments Ecosystem with Scale

On Feb. 19, 2024, Capital One announced its intent to acquire Discover in an all-stock deal valued at $35.3 billion, “representing a premium of 26.6% based on Discover’s closing price of $110.49 as of February 2024.” The company news release indicated that the combined firms will have access to a global payments platform with 70 million merchant acceptance points in 200 countries and territories. 

The acquisition is subject to regulatory approval. The deal comes three weeks after the Office of the Comptroller of the Currency (OCC) proposed “to amend its rules for business combinations involving national banks.” A rewrite of the Bank Merger Act (BMA), posted at Regulations.gov on Feb. 13 is in the comment period until April 15, 2024. The BMA requires the OCC to consider competition, financial and managerial resources, community needs, and effectiveness in combatting money laundering. It comes when regulators announce their intention to eliminate “fast track approvals.” 

If the merger is approved, Capital One will move from its position as the fourth-largest credit card issuer in the United States to No. 1 or 2. The two firms will form a global payments force with strengths in deposits, a deep commitment to consumer credit, a payments network, merchant capabilities in 200 countries and territories, a debit network, a franchised business card network operating in 55 countries (Diners Club), and capabilities in auto, commercial, home, and student loans.