This year, Capital One plans to acquire Discover for $35.3 billion. The date and details are not yet final, but changes for Discover and Capital One cardholders could be on the horizon.
“Capital One announced that it will be moving its cards from the Visa and Mastercard payment networks to the Discover card network,” said Jason Steele, a member of CNET Money’s expert review panel and a credit card expert.
If you’re a Capital One cardholder, experts don’t expect any major changes right away, but if the merger goes through, your card will likely eventually move to the Discover payment network.
How the evolution of payment networks could affect you
Discover is one of the four major credit card networks, along with Visa, Mastercard and American Express. Currently, Capital One offers Visa and Mastercard credit cards, but would likely slowly begin moving its cards to the Discover network if the acquisition goes through.
Why is this important? The Discover network is smaller than Visa and Mastercard and is not accepted everywhere in the United States or abroad.
“Although many countries where Discover is not widely accepted are not popular tourist destinations, some are,” Steele said. For example, Discover is not accepted in Panama, Kenya and Serbia, according to his website. In countries where Discover is accepted, rules may vary by store. Steele also added that Discover is not currently accepted at all major U.S. retailers, such as Costco.
However, Capital One plans to expand Discover’s payments network, which could increase its overseas presence in the future. “We continue to believe that Visa and Mastercard play a very important role in the future of Capital One, but that we can build a network and a network story that, over time, can take a greater share of our volume “said the CEO of Capital One, Richard Fairbankin an emailed statement.
Experts believe that in the long run, this merger could be good news for Capital One and Discover cardholders.
“Capital One acquired Discover largely for its processing network,” said Aaron Hurd, a credit card expert and member of CNET Money’s expert review panel. Hurd predicts that over time, Capital One will expand Discover’s payments network, both overseas and in the United States. This expansion would make it easier to use your Discover card abroad, as well as any Capital One cards moved to this network.
How to prepare for the Capital One and Discover merger
Hurd expects Capital One to continue operating both brands somewhat autonomously for some time. “Capital One likely will not alienate Discover’s large customer base by dropping the Discover card brand,” he said. Hurd expects small changes to the products after the acquisition.
If you rely on your Capital One credit card as your primary payment method, you will likely eventually be transferred to the Discover network. While there are plans to expand this payment network, if you’re worried about traveling abroad, Steele suggests looking for a Visa or Mastercard backup option.
This acquisition is not finalized, but experts expect it to be adopted. If the merger goes through, look for updates from Discover or Capital One regarding any changes.
