Capital One acquires Discover

[Ken555]

Hopefully C1 is able to expand the Discover network internationally and improve competition in the payment processing space.

As a merchant and a cardholder, I highly doubt this perceived increase in competition will save me any money.

 

[n42]

As a merchant and a cardholder, I highly doubt this perceived increase in competition will save me any money.

It could offer a viable alternative to Visa/Mastercard for large merchants during negotiations (such as Costco).

For cardholders, it could improve Capital One's ability to offer cashback and other benefits, since now they own the payment network (and won't have to pay fees to Visa/Mastercard). For example, Discover bank has been able to offer 1% cash back on their debit card.

C1 plans to significantly expand Discover's acceptance internationally. That is a benefit to consumers. However, it will take some time, and in the interim, it could limit C1's cards internationally. Their travel cards will hopefully stay on Visa/Mastercard until they get the international network in place.

Of course Capital One will try to maximize their profits, but I could see some minimal benefit to merchants and consumers.

 

[Ken555]

It could offer a viable alternative to Visa/Mastercard for large merchants during negotiations (such as Costco).

For cardholders, it could improve Capital One's ability to offer cashback and other benefits, since now they own the payment network (and won't have to pay fees to Visa/Mastercard). For example, Discover bank has been able to offer 1% cash back on their debit card.

C1 plans to significantly expand Discover's acceptance internationally. That is a benefit to consumers. However, it will take some time, and in the interim, it could limit C1's cards internationally. Their travel cards will hopefully stay on Visa/Mastercard until they get the international network in place.

Of course Capital One will try to maximize their profits, but I could see some minimal benefit to merchants and consumers.

Yes. And, I stand by my earlier comment.

 

[rickandcindy23]

How different is the exchange rate from US to other countries' dollar with the various credit cards out there. Capital One is better? Chase? I had no idea they were different.

I pay for one Australian timeshare we own that is in RCI points. When I do the math for the exchange rate, Chase comes in a lot higher than what I think it should be. Australia's dollar is pretty low now, but when I pay the fees, I see a higher rate. The credit card is getting more from me than I intended.

 

[rickandcindy23]

You have to like twisty dark comedy/drama. Start with Season One. It was filmed at the Four Seasons Wailea on Maui. I started watching because of the setting and the cast.

Interesting, I will have to watch it.

 

[n42]

How different is the exchange rate from US to other countries' dollar with the various credit cards out there. Capital One is better? Chase? I had no idea they were different.

I pay for one Australian timeshare we own that is in RCI points. When I do the math for the exchange rate, Chase comes in a lot higher than what I think it should be. Australia's dollar is pretty low now, but when I pay the fees, I see a higher rate. The credit card is getting more from me than I intended.

It is the payment network that sets the exchange rate. So Visa's rate is slightly different than Mastercard. And now Capital One will get to set their own rate since they will control the payment network.

Credit card exchange rates are generally considered to be very competitive, however banks can add their own foreign transaction fee (FTF). Many Chase cards have a 3% FTF, whereas all Capital One cards have no FTF.

 

[Luanne]

It is the payment network that sets the exchange rate. So Visa's rate is slightly different than Mastercard. And now Capital One will get to set their own rate since they will control the payment network.

Credit card exchange rates are generally considered to be very competitive, however banks can add their own foreign transaction fee (FTF). Many Chase cards have a 3% FTF, whereas all Capital One cards have no FTF.

I currently have two Chase cards. One has an FTF, one does not.

 

[rickandcindy23]

My Chase Sapphire Reserve is supposed to not have fees, but the amount charged doesn't = my math estimate of what it should be.

My bill for Mansfield this year is supposed to be $1,520 AUS, should be about $1012 U.S. It will come up higher. I haven't paid it yet, but it always does show higher than I expected it to be.

 

[n42]

My Chase Sapphire Reserve is supposed to not have fees, but the amount charged doesn't = my math estimate of what it should be.

My bill for Mansfield this year is supposed to be $1,520 AUS, should be about $1012 U.S. It will come up higher. I haven't paid it yet, but it always does show higher than I expected it to be.

Visa has an exchange rate calculator available online. I can't post links, but if you search for "visa exchange rate calculator" you should be able to find it on their website. Make sure to click "Edit" and set the bank fee to 0%.

$1,520 AUS = $988.30 USD according to Visa's own calculator. Exchange rates fluctuate daily.

When a foreign merchant runs your card, they have the choice to run it in their local currency, or convert it to USD first. If they convert it to USD before charging your card, it will be at an exorbitant rate. It is always best to have foreign merchants charge your card in their local currency.

 

[davidvel]

My Chase Sapphire Reserve is supposed to not have fees, but the amount charged doesn't = my math estimate of what it should be.

My bill for Mansfield this year is supposed to be $1,520 AUS, should be about $1012 U.S. It will come up higher. I haven't paid it yet, but it always does show higher than I expected it to be.

Visa has an exchange rate calculator available online. I can't post links, but if you search for "visa exchange rate calculator" you should be able to find it on their website. Make sure to click "Edit" and set the bank fee to 0%.

$1,520 AUS = $988.30 USD according to Visa's own calculator. Exchange rates fluctuate daily.

When a foreign merchant runs your card, they have the choice to run it in their local currency, or convert it to USD first. If they convert it to USD before charging your card, it will be at an exorbitant rate. It is always best to have foreign merchants charge your card in their local currency.

I suspect what n42 says may be happening. Do you pay these fees online? Can you choose AUS$ vs. US$? If you are paying in US$ it will be far higher than the market exchange rate.

This is just like paying with CC abroad. Always pay in foreign currency and let the bank convert it. Many places try to get you to pay in US$ (esp. in Mexico,) and they pick the (unfavorable to you) exchange rate.

 

[TravelJoy]

Yes between Venture X and Chase Sapphire Preferred didn't need anything else, added believe it or not Robinhood Visa for 3% the other 2 miss, these 3 cards do well.

The fee for the Reserve card is a deal breaker.

 

[RENTER]

The was one benefit for me using Schwab's Stock Slice fractional shares platform. It only covers those stocks in the 500 index which you can buy for as low as $5.00. DFS was removed from the index and replaced with COIN. I prefer using fractional shares to dollar cost average into COIN

 

[fer829]

Here is the way it worked from the Discover side:
--for the Discover stock (DFS) on 5/19/2025 there was a "Corporate Action Withdrawal" of all my DFS stock and a "Corporate Action Contribution" using the equal total dollar amount to acquire Capital One (COF) stock. DFS is no longer listed on the stock exchanges
--for my Discover credit card, we were told to continue using it the same as in the past.

 

[Rolltydr]

Yes. And, I stand by my earlier comment.

It is a very safe bet.

 

[Carolinian]

Capital One cards have no foreign transaction fees and good exchange rates, making them competitive cards for travelling internationally. Unfortunately that's about to change as they transition to the Discover network.

That is one of the things I have always liked about Cap One. Most if not all major cards give you the midmarket interbank exchange rate but most have a wicked foreign transaction fee. If Cap One starts charging those fees, I will just fall back on my credit union cards which do not charge this fee.

 

[dioxide45]

For cardholders, it could improve Capital One's ability to offer cashback and other benefits, since now they own the payment network (and won't have to pay fees to Visa/Mastercard). For example, Discover bank has been able to offer 1% cash back on their debit card.

Chase doesn't own the payment networks for the cards they carry but they have plenty that offer decent cash back and they have some of the better reward cards out there. Pretty much every other card, except Amex, doesn't own the payment network. Why does owning the payment network matter?

 

[jp10558]

Chase doesn't own the payment networks for the cards they carry but they have plenty that offer decent cash back and they have some of the better reward cards out there. Pretty much every other card, except Amex, doesn't own the payment network. Why does owning the payment network matter?

I also wonder why discover was never bigger really - but Amex often gets panned by merchants for having higher fees than Visa/MC so clearly owning the payment network doesn't have anything to do with fees or bank benefits. At least for consumers I would expect you can flip a coin on Capital One increasing the fees for the network, but I also think Discover was already in the "less often accepted" group, so I would guess they'd have to lower fees and otherwise come up with some reason for merchants to want to take Discover vs just saying to CapitalOne keep using Visa/MC or go away.

Although, on top of that again, I think anyone using a modern system like Square basically sees the same fees for every payment method under the sun so for the small merchants that wouldn't be able to negotiate better terms, I really don't know why they are not more payment network agnostic. I think they're just slow to adopt one of the "take everything" systems, perhaps to their detriment.

 

[WaikikiFirst]

Why does owning the payment network matter?

from a corporate perspective, it is night & day.
Own it = you're a toll-taker
Don't own it = you're a risk-taker
Different CEOs (aka people) may decide to implement different strategies based on the difference. There is a "standard" approach CEOs use.

 

[WaikikiFirst]

did anyone quote the # of cardholders C1 has vs what Discover has? what about the avg FIFO score of those 2 groups?

 

[Ken555]

did anyone quote the # of cardholders C1 has vs what Discover has? what about the avg FIFO score of those 2 groups?

Took me about 30 seconds to find these answers. Lots of info online. Sorry I don’t have time to post it right now.

 

[dioxide45]

from a corporate perspective, it is night & day.
Own it = you're a toll-taker
Don't own it = you're a risk-taker
Different CEOs (aka people) may decide to implement different strategies based on the difference. There is a "standard" approach CEOs use.

Then why don't any of the other big financial institutions setup their own payment networks?

 

[Ken555]

Then why don't any of the other big financial institutions setup their own payment networks?

Do you have a Diners card? No? Ask yourself why.

 

[WaikikiFirst]

why don't any of the other big financial institutions setup their own payment networks?

Hmmmm. Why doesn't Target open up 999 warehouses in the USA and take away at least half of Costco's biz?

 

[pedro47]

The Discover card was not a widely used credit card by merchants & restaurants in the Coastal Virginia areas. IMHO.

Capital One is a more widely used credit card in the Coastal Virginia areas. IMHO.

I’m seeing more new Chase Bank building under construction in the Coastal Virginia areas this year.