MCLEAN, Va.—A new report suggests Capital One’s planned purchase of Discover will have a major impact on the payments space, should it be approved.
The Wal Street Journal said the deal could make Capital One a bigger competitor to Visa and Mastercard. “But another benefit might be to help it better compete with the likes of American Express, or even banking titans such as JPMorgan Chase.
The Journal said the agreement might in the future enable Capital One to offer things such as debit rewards or superior interest rates on deposits.
“That could further Capital One’s aim of being a leading digital bank and competing with the country’s largest branch banks, such as Chase, Bank of America and Wells Fargo,” the Journal analysis stated.
‘Immediate Bump’
“Another benefit to being vertically integrated with a network is the ability to move some of Capital One’s own credit cards over to Discover’s network. Doing so can deliver an immediate bump in revenue, because Capital One would no longer have to share merchant fees with other players," the report added.
The acquisition remains subject to government approval, and some concerns are already being voiced about a reduction in competition.
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