Capital One and Discover Merger Could Cause Payment Roadblocks for U.S. Travelers

Consumers accustomed to swiping their Capital One cards during overseas travels could face issues once the credit card giant transitions its network to Discover.

Currently, Capital One’s card payments are processed on networks operated by Visa and Mastercard. After the acquisition of Discover was approved in December by the Office of the Delaware State Bank Commissioner, Capital One said it plans to move its payments processing to Discover’s rails.

This change is unlikely to have a significant impact in the U.S., where Discover’s network is nearly as ubiquitous as Visa, Mastercard, and American Express. However, Discover is far less common outside the U.S, potentially causing  payment processing issues for U.S. travelers using Capital One cards abroad.

Forging Ahead

Despite these hurdles, Capital One is forging ahead with plans to move all its debit cards and some of its credit cards to Discover’s network as early as Q2 2025. The company also hopes to migrate a larger portion of its credit card business to the Discover network in the future.

“In total, across debit and credit, we expect to add over 25 million Capital One cardholders and over $175 billion in Capital One purchase volume by 2027,” said Richard Fairbank, CEO of Capital One, at an investor presentation last year. “This injection and volume in the network will help Discover be competitive with the leading network.”

Pledging Investments

The centralization of financial services among a few major players has been a key driver of opposition to the merger. Capital One’s acquisition of Discover, valued at over $35 billion, will make the combined company the largest card issuer in the U.S. The deal will position Capital One with approximately $250 billion in card balances, reflecting a 22% increase in market share.

In order to mitigate some of the concerns surrounding the highly scrutinized acquisition, Capital One recently pledged $265 billion in lending, philanthropy, and community investments if regulators approved the deal. The company stated that this commitment is twice as large as any other community benefits plan of its kind.