Written by: Eric Bank
Edited by: Lillian Guevara-Castro
Reviewed by: Lynn Cadet
Key Takeaways
- Capital One's all-stock $35.3 billion acquisition of Discover completed regulatory proceedings, becoming the largest acquisition involving two credit card giants in more than a decade.
- The agreement came into antitrust scrutiny as a result of its implications for restructuring the subprime industry, and its critics voiced concerns over decreased competition.
- To obtain regulatory clearance, Capital One made deep community reinvestment commitments involving $100 billion in loans and contributions over a five-year period.
Following months of regulatory scrutiny and waves of media criticism, Capital One’s acquisition of Discover Financial has finally entered the end zone. The $35.3 billion all-stock transaction creates the largest credit card issuer in the U.S. by loan volume, a seismic change in an industry controlled by a few large giants.
The deal is the largest credit card industry consolidation in more than a decade as it marries two issuers that each have national reach. The combined company is now poised to compete more effectively with international networks such as Visa and Mastercard.
The path to acceptance wasn’t smooth. The transaction came into sharp focus over its implications for subprime credit availability, as consumers already have few choices. Opponents feared that consolidating them could increase borrowing fees and decrease alternatives.
To secure backing, Capital One issued a series of concessions and community commitments to soften resistance. The years to come will tell if and how well the company follows through on its promises — or discriminates against the most needy borrowers.
Chronology of the Agreement
Capital One publicly declared its interest in acquiring Discover in February 2024. The announcement instantly raised antitrust alarms among consumer activists, legislators, and regulators.
At the center of concern as to why they should be opposed is a fear that consolidating two leading top-10 credit card issuers lessens consumer choice among Americans who have poor or subprime credit histories.
The acquisition came under close examination by the Senate Banking Committee, whose members asked how low-income borrowers would be served by the combined organization. The Consumer Financial Protection Bureau and the Justice Department reviewed the merger for its effect on competition.
In spite of its reservations, regulators held back from halting the transaction. By May 2025, following various hearings and transparency pledges, the merger went through — albeit with some supervision.
Subprime Lending Effects
The combined corporation now holds a dominant portion of the American credit card industry, including a significant portion of subprime accounts. The portfolio of Discover rendered it desirable to Capital One, which has already operated within the near-prime and subprime markets for some time.
Subprime borrowers with credit scores below 620 form a profitable but riskier portion of the market. There were some nonprofit concerns that a merged Capital One-Discover company would result in stricter underwriting or higher APRs.
Others in its industry countered that greater scale could lower operating expenses and increase access. Capital One stated that the combination would enable it to better serve all customers through innovation, efficiency, and responsible growth.
Community Investment Commitments
To alleviate concerns and support its reputation, Capital One committed $100 billion in five years to community-based initiatives. That includes $50 billion in small business and underserved borrower loans, $10 billion in community development financing and $40 billion for affordable housing and philanthropic grants.
“This deal brings together two innovative, mission-driven companies that together are poised to deliver breakthrough products and experiences to consumers, businesses, and merchants,” said Richard D. Fairbank, Founder and CEO of Capital One
The company also intends to increase support for minority depository institutions (MDIs), community development financial institutions (CDFIs), and nonprofit organizations focusing on financial inclusion. The financial literacy initiatives at Discover will allegedly be kept under the Capital One name.
Response From Industry
Industry response has been generally positive, despite some analysts looking for post-merger regulatory implications. With its combined customer base now holding tens of millions of card accounts, even subtle shifts in policy have significant implications — particularly for consumers who may be at high risk.
Advocates are taking a wait-and-see approach. The real test will be whether low-income and underserved borrowers get better access to credit.
The consolidation puts pressure on other top issuers to rethink how they cover the subprime market. As the consolidation changes the landscape, companies that previously shunned subprime borrowers may feel compelled to adjust.
Capital One’s takeover of Discovery is a landmark moment in the credit card business. With high stakes on offer and overseers keeping watch, it will be interesting to see whether the combination broadens opportunity — for all — or deepens concerns about too little power in too few hands.
