The pending merger between Capital One and Discover Financial services received approval from several regulators on Friday, bringing the $35bn tie-up closer to completion.
The Federal Reserve and the office of the comptroller of the currency (OCC) signed off on the deal, which was first announced in February 2024.
The Federal Reserve Board said it entered into a consent order with Discover and assessed a fine of $100m for overcharging certain interchange fees from 2007 through 2023. Discover has since terminated these practices and is repaying those fees to affected customers, according to the Federal Reserve. The board’s action is being taken in coordination with the Federal Deposit Insurance Corp.
It said Capital One had committed that it would comply with the board’s action against Discover of Riverwoods, Illinois, including remediation requirement, as a condition of approval.
The OCC said its approval reflects its “careful analysis of the effect of the merger on communities, the banking industry, and the US financial system”.
Capital One, based in McLean, Virginia, said it expected to complete the acquisition on 18 May now that it has received all required regulatory approvals. Shareholders of both companies approved the deal in February.
The deal joins two of the largest credit card companies that are not banks first, such as JPMorgan Chase and Citigroup, with the notable exception of American Express. It also brings together two companies whose customers are largely similar: often Americans who are looking for cash back or modest travel rewards, compared to the premium credit cards dominated by AmEx, Citi and Chase.
It also will give Discover’s payment network a major credit card partner in a way that could make the payment network a major competitor once again. The US credit card industry is dominated by the Visa-Mastercard duopoly with AmEx in a distant third place and Discover in an even more distant fourth place.
