Capital One’s Acquisition of Discover Receives Final Regulatory Approvals, Nears Finish Line

We’re one step closer to a major shift in the U.S. credit card landscape following Friday’s regulatory approvals of Capital One’s acquisition of Discover. The Federal Reserve Board announced its approval of the deal on Friday, after evaluating numerous angles of the merger.

The Federal Reserve Board took under consideration the “financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,” when evaluating the acquisition, according to the Fed’s press release.

In the same press release, the Federal Reserve Board also announced that it’s levying a $100 million fine against Discover for practices resulting in the overcharging of certain fees starting in 2007 and continuing through 2023. Discover has since abandoned those practices and has been making restitution to affected customers.

The Office of the Comptroller of the Currency (OCC) also gave Capital One and Discover the greenlight to move forward with their plans to merge. The OCC’s approval of the transaction reflects the agency’s “careful analysis of the effect of the merger on communities, the banking industry, and the U.S. financial system.”

Capital One’s purchase of Discover will create the largest credit card issuer in the country, as measured by loan volume. The combined company will also be among the 10 largest financial institutions in the country, behind banks, including JPMorgan Chase & Co., Bank of America, Wells Fargo, and Citi.

The approvals by the Federal Reserve Board and the OCC join the Delaware State Bank Commissioner’s blessing of the deal in December 2024 and approval from Capital One and Discover shareholders in February 2025.

Capital One and Discover stockholders approved the acquisition in early 2025.

More than 99% of shareholders of both companies voted in favor of the acquisition during recent stockholders meetings.

Richard Fairbank, Founder, Chairman, and CEO of Capital One, said in a press release that the approval of the acquisition is an exciting moment for both Capital One and Discover.

“We understand the critical importance of a strong and competitive banking system to our customers and our economy, and we appreciate the thoughtful and diligent engagement of our regulators as they thoroughly reviewed the deal over the past 14 months,” Fairbank said.

Capital One’s purchase of Discover figures to bring changes to the payments arena. In addition to forming a new mega-issuer, the merger will allow Capital One to gain control of Discover’s payment network and compete with industry behemoths Mastercard and Visa.

“The combination of our two great companies will increase competition in payment networks, offer a wider range of products to our customers, increase our resources devoted to innovation and security, and bring meaningful community benefits,” said Michael Shepherd, Interim CEO and President of Discover, in a press release.

Capital One developed a community benefits plan as part of its acquisition of Discover that will extend more than $265 billion in investing, lending, and philanthropy to promote financial opportunity over a five-year period.

The plan aims to provide underserved consumers with increased access to banking products and services. In a statement accompanying the benefit plan announcement, Fairbank said Capital One’s commitment to economic inclusion and financial well-being are an important part of the company.

“We have a long history of developing innovative ways to serve these core constituencies, and we are committed to ensuring, through this community benefits plan, that our acquisition of Discover builds on our history of positive impact,” Fairbank said.

The $265 billion plan includes provisions to support the following initiatives. 

Community Development: Capital One plans to spend more than $35 billion to support affordable housing projects for low and moderate income consumers.

Another $5 billion is set to support solutions to issues low and moderate income consumers face, including concerns related to education, employment, food accessibility, healthcare, and public infrastructure.

Philanthropic Programs: Capital One intends to boost philanthropic giving as a result of its community benefit plan. The company will provide additional grants to support programs that empower consumers to pursue homeownership, including assistance for down payments and counseling to help prevent foreclosures.

Consumer Lending Tools. Capital One aims to provide more lending opportunities to low and moderate income consumers and those who reside in their communities. The financial institution also will provide additional grant monies to credit counseling agencies through its community benefit plan.

While the merger brings the possibility of financial rewards for Capital One, the company’s purchase of Discover comes with more than just plans to grow its bottom line. The acquisition, which is expected to close on May 18, aims to benefit communities across the country. 

Fairbank thanked employees of both companies in his press-release, noting that thousands of workers contributed their time to make the merger possible.

“We look forward to bringing these two great companies together with a profound sense of possibility and responsibility to deliver for our customers, associates, shareholders, and communities,” he said.