It’s been almost a year since Capital One’s $35.3 billion deal to acquire Discover shocked the credit card industry.
Announced in February 2024—and expected to close soon—the deal would make Capital One the largest credit card issuer in the U.S., surpassing JPMorgan Chase in balances owed. The combined business could even become a serious challenger to Visa and Mastercard.
The merger is on track for approval at shareholder meetings scheduled for February 18 after Delaware gave the merger the go-ahead in December 2024. Federal Reserve regulators continue to have questions about the deal, including the possibility of interchange fees rising and impacts on minority communities.
While the companies’ shareholders are undoubtedly pleased, all the excitement is tempered by concerns about the credit card behemoth’s impact on consumers. Regulators and consumer advocates have warned about the downsides: reduced competition, higher fees, and more limited options for customers.
Capital One’s plan to transition its cards to Discover’s payment network is raising red flags for international travelers, who might face challenges using their cards abroad due to Discover’s smaller global footprint.
A new credit card giant emerges
If approved, the Capital One-Discover merger would create a whole new leader in the U.S. credit card market. Combined, the two companies hold 19% of outstanding credit card loans in the country, with an estimated market share of 22%. But the cards themselves are only half of the story.
The consolidation would make Capital One not only the largest issuer by balances owed but also a major player in payment processing, thanks to ownership of Discover’s proprietary payments network. Capital One has announced plans to move its products away from Mastercard and Visa over to the Discover payment network.
When the deal was announced last year, Capital One CEO Richard Fairbank framed it as an opportunity to challenge Visa and Mastercard’s dominance while offering more competitive products to underserved customers.
“This is a singular opportunity to bring together two very successful companies with complementary capabilities,” Fairbank said during an investor call last year.
But by reducing competition among issuers, the merger could give Capital One leverage to raise interchange fees—the costs that merchants pay for accepting card payments but that often trickle down to customers through higher prices or reduced rewards.
If the merger goes through, it’s a safe bet that interchange fees will be under scrutiny. Congress is working on legislation to enhance competition in the credit card market. The expansion of the Discover payment network and its impact on consumer costs adds another variable to the equation.
Travel trouble ahead for Capital One cardholders?
One big change for cardholders will be the transition of Capital One cards from Visa and Mastercard networks to Discover’s payment network, starting in the second quarter of 2025—if the deal closes on time. While this shift is expected to strengthen Discover’s competitiveness domestically, it may create headaches for international travelers.
Discover is widely accepted across the U.S., but its global footprint lags behind Visa and Mastercard. In countries like Japan or parts of Europe, where Discover acceptance is limited, travelers may find themselves unable to use their cards at key locations.
For frequent flyers or those planning overseas trips, this change could mean carrying a backup payment method—or even switching issuers altogether. Considering Capital One’s expansion into the travel space with Capital One Travel and products like the , moving payment processing to a network travelers can’t use presents a problem.
Fairbank addressed this issue in a December 2024 investor call, saying that the transition would coincide with an expansion of Discover’s international acceptance. He also sought to assure current cardholders by reaffirming a continuing relationship with Visa and Mastercard. “The move (to the Discover network) is going to be more surgical,” he said.
For now, analysts suggest that Capital One might take a more cautious approach toward moving all cards to Discover right away.
“While there could be certain advantages to Cap One of such a shift, there would be very significant short-term costs that militate against moving existing Cap One cardholders over to Discover,” says Julian Morris, Senior Scholar at the International Center for Law & Economics.
Morris specified that costs would include renegotiating terms with reward and co-brand partners and issuing new physical cards with a new customer agreement (which can cost more than $5 for each card).
What should cardholders do now?
As this mega-merger moves closer to reality, consumers should take stock of their financial products and consider how these changes might affect them personally. If you’re a frequent traveler who only uses a Capital One credit card you should be safe, at least in the short-term, as Capital One has affirmed a commitment to widespread international acceptance.
While regulators continue their scrutiny—and shareholders prepare for their upcoming votes—the future of this deal remains uncertain. But one thing is clear: Keeping an eye on this evolving story could help you stay ahead of any surprises that come your way.
Neither Capital One nor Discover responded to a request for comment.
