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Discover’s payment network is smaller than Visa and Mastercard, but Capital One is invested in growing it.
Dashia is a staff editor for CNET Money who covers all angles of personal finance, including credit cards, banking and consumer spending. From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.
This year, Capital One plans to acquire Discover for $35.3 billion. The date and details aren’t final yet, but changes for both Discover and Capital One cardholders could be on the horizon.
“Capital One has said that it will transition its cards from the Visa and Mastercard payment networks to the Discover card network,” said Jason Steele, a CNET Money expert review board member and credit card expert.
If you’re a Capital One cardholder, experts don’t expect major changes right away, but if the merger goes through, your card will likely be shifted to the Discover payment network eventually.
How changing payment networks could impact you Discover is one of the four major credit card networks, along with Visa, Mastercard and American Express. Right now, Capital One offers both Visa and Mastercard credit cards but would likely slowly begin to shift their cards to the Discover network if the acquisition goes through.
Why does this matter? Discover’s network is smaller than Visa and Mastercard and isn’t accepted everywhere in the US or abroad.
“While many countries where Discover isn’t widely accepted are places that aren’t popular tourist destinations, some are,” Steele said. For example, Discover isn’t accepted in Panama, Kenya and Serbia, according to its website. In countries where Discover is accepted, the rules can vary by store. Steele also added that Discover isn’t currently accepted at all major US retailers, such as Costco.
However, Capital One plans to expand Discover’s payment network, which could increase its footprint overseas in the future. “We continue to believe that Visa and Mastercard play a very important part in Capital One’s future, but that we can build a network and a network story that over time can take more of our volume,” said Capital One’s CEO, Richard Fairbank, in an emailed statement.
Experts think that in the long run, this merger could spell good news for both Capital One and Discover cardholders, alike.
“Capital One acquired Discover in large part for its processing network,” said Aaron Hurd, a credit card expert and CNET Money expert review board member. Hurd predicts that over time, Capital One will expand Discover’s payment network, both overseas and in the US. This expansion would make it easier to use your Discover card abroad, as well as any Capital One cards that are moved to this network.
How to prepare for the Capital One and Discover mergerHurd expects Capital One to continue operating both brands somewhat autonomously for some time. “Capital One probably won’t alienate Discover’s large customer base by discontinuing the Discover card brand,” he said. Hurd does expect small changes to products after the acquisition.
If you depend on your Capital One credit card as your primary payment method, you’ll likely eventually be ported over to the Discover network. Although there are plans to expand this payment network, if you’re worried about traveling abroad, Steele suggests looking for a backup Visa or Mastercard option.
This acquisition isn’t finalized, but experts expect it will pass. If the merger goes through, look for updates from either Discover or Capital One about any changes.
