This year, Capital One plans to buy Discover for 35.3 billion dollars. The date and details are not yet final, but changes for both Discover and Capital One cardholders could be on the horizon.
“Capital One said it will switch its cards from the Visa and Mastercard payment networks to the Discover card network,” it said Jason SteeleCNET money member of an expert review board and credit card expert.
If you're a Capital One cardholder, experts don't expect big changes right away, but if the merger happens, your card will likely be moved to the Discover payment network eventually.
How Changing Payment Networks May Affect You
Discover is one of four major credit card networksalong with Visa, Mastercard and American Express. Currently, Capital One offers both Visa and Mastercard credit cards, but will likely begin to slowly transition their cards to the Discover network if the acquisition goes through.
Why is this important? Discover's network is smaller than Visa and Mastercard and is not accepted everywhere in the US or abroad.
“While many countries where Discover is not widely adopted are places that are not popular tourist destinations, some are,” Steele said. For example, Discover is not accepted in Panama, Kenya and Serbia, according to her 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 payment network, which could increase its influence overseas 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 can take more of our volume over time,” said the Capital One CEO. Richard Fairbankin an emailed statement.
Experts think that in the long run, this merger could be good news for both Capital One and Discover cardholders.
“Capital One bought Discover in large part because of its processing network,” he said Aaron Hurdcredit card expert and CNET Money review expert board member. Hurd predicts that over time, Capital One will expand Discover's payment network, both overseas and in the United States. This expansion will make it easier to use your Discover card abroad, as well as all Capital One cards that have moved to this network.
How to prepare for the Capital One and Discover merger
Hurd expects Capital One to continue to operate the two brands somewhat autonomously for some time. “Capital One is unlikely to alienate Discover's large customer base by discontinuing the Discover card brand,” he said. Heard expects little product change after purchase.
If you depend 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 has not been finalized, but experts expect it to go through. If the merger is complete, check with Discover or Capital One for updates on any changes.