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Capital One made big news in the credit card industry on Feb. 19, 2024, when the company announced it’s buying Discover® for $35.3 billion. It’s still in the early days of the process of Capital One buying Discover, and no one knows what exact product changes might happen. But there are reasons to be hopeful that this deal could be good news for credit customers — not just Capital One and Discover cardholders, but anyone who uses credit cards.

Let’s look at a few reasons why Capital One buying Discover could be good for your wallet.

1. Discover is not going away

If you’re a Discover customer and you love Discover’s unique products like its cash back rewards for debit card purchases, don’t worry — Discover is not going away. Capital One has already stated that it intends to keep the Discover brand alive.

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Don’t assume that your Discover cards are going to change in a “bad” way; Capital One is likely to keep offering the same features and benefits that Discover customers love. Current customers of Discover don’t have to do anything or take any action for now. Just sit tight and keep using your Discover banking products like usual.

2. Capital One cards might get more “rewarding”

By buying Discover, Capital One is not just buying a credit card company — it’s buying Discover’s payment network. There are four big payment networks for credit and debit cards: Visa and Mastercard are the top two biggest, American Express is third, and Discover is fourth. By purchasing Discover’s payment network, Capital One will have extra financial flexibility behind the scenes of the payment system to make more money and potentially offer better rewards to Capital One customers.

No one knows exactly what kinds of new products or rewards cards Capital One could offer as a result of buying Discover. But a few ideas might include the following.

Discover-style rewards debit cards

By buying Discover’s payment network, perhaps Capital One can adapt some of the most customer-friendly features of Discover debit cards. The same kinds of cash back rewards that Discover offers today could be available for Capital One customers in the future.

Better premium rewards cards

If Capital One is saving money (and making more money) by owning its own payment network, that could mean better rewards for its best customers. Capital One already ranks highly among the best rewards credit cards. Buying Discover (and its payment network) could turn Capital One credit cards into an even better deal for savvy shoppers.

Better benefits for shopping at select merchant partners

Capital One says it wants to use Discover’s payment network to work more closely with merchants (retailers, restaurants, and other stores) to offer better benefits and experiences. This could mean better customer loyalty programs, special offers from your favorite brands, and more.

3. Better deals from Visa and Mastercard

By buying Discover’s payment network, Capital One would bring more competition to Visa and Mastercard. Capital One has already announced that it intends to move all of its debit cards to the Discover payment network (so if you have a Capital One Mastercard debit card, you could soon see a new logo on it).

Capital One might keep working with Visa and Mastercard, but it doesn’t need them as much anymore. This means Visa and Mastercard have to sweeten the deal behind the scenes to make Capital One want to keep offering its credit cards through their payment networks.

How is this good news for credit card customers? When big payment networks like Visa and Mastercard have to compete harder, that could lead to more generous rewards for credit card customers like you. Capital One customers might get a better deal out of this, but Visa and Mastercard might also be incentivized to offer better features, perks, and rewards for other credit card companies, too. This deal could be good news for a wide range of customers, not just people who use Capital One credit cards.

Bottom line

The deal is not yet done, and might get blocked by federal regulators. The FTC (Federal Trade Commission) might decide that Capital One buying Discover would create “too big” of a credit card company. If regulators decide that combining two credit card companies into a much bigger company would result in anti-competitive (monopoly) business practices that hurt consumers, the federal government could sue to stop this deal.

But if this purchase agreement is allowed to go through, Capital One’s newly acquired payment network could create new competition to the biggest companies (Visa and Mastercard) and open up new opportunities for new products and better benefits for customers. There are hopeful signs that Capital One buying Discover might actually be good news for anyone who uses credit cards.

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