From CNBC:

Capital One has announced a $35.3 billion acquisition of Discover Financial in order to protect against fintech and regulatory threats. This acquisition will position Capital One as the largest credit card company by loans and third in terms of purchase volume. However, the deal’s approval is uncertain, with Democratic lawmakers urging for its blockage.

Capital One’s CEO, Richard Fairbank, is a long-term thinker and billionaire who aims to create a global digital payments and tech company. The acquisition of Discover Financial will give Capital One a stronger hand in battling other banks, fintechs, and big tech companies by separating itself from the pack and future-proofing the company.

Fairbank and Capital One plan to utilize Discover’s payments network, which is considered a “very rare asset,” in order to deal directly with merchants and create an end-to-end ecosystem. This aims to fend off competition from fintech players and buy now, pay later firms, and create more value for merchants, small businesses, and consumers.

The potential acquisition of Discover Financial could position Capital One favorably in the face of proposed legislation that aims to cap fees charged by Visa and Mastercard, threatening the economics of credit card rewards programs. However, the deal’s survival may depend on whether it’s seen as boosting a struggling payments network or creating more concentration among a dominant card lender.



Read more: Why Capital One is buying Discover in the biggest merger yet of 2024