New York, NY – A potential new major player in the credit card industry is on the horizon in the United States following a recent approval from regulatory bodies for a significant merger. Capital One has been given the green light by the Federal Reserve’s Board of Governors and the Office of the Comptroller of the Currency to move forward with its acquisition and merger with Discover Financial Services, signaling a potential shift in the market.

To secure final approval, Capital One must present a plan to the OCC addressing any outstanding enforcement actions against Discover Bank and outlining strategies for remediation. The all-stock deal, initially announced over a year ago, is poised to position Capital One as a formidable competitor against other leading credit card-issuing banks like JPMorgan Chase, Bank of America, and Citigroup, which do not handle transactions internally.

The merger is not without potential implications for current Discover customers, who may benefit from increased merchant acceptance rates but also face the possibility of heightened credit card interest rates. Capital One’s historical focus on customers with credit scores in the subprime range suggests that interest rates for these individuals may be higher compared to those with better credit scores.

In the midst of approving the deal, the Fed has imposed a consent order on Discover, attributing a $100 million penalty to the company for overcharging certain interchange fees over a specific timeframe. The transaction’s chances of receiving clearance from the Department of Justice under the Biden administration were more uncertain due to the administration’s antitrust stance, contrasting with the more merger-friendly outlook of the previous Trump administration.

Following President Trump’s reelection last year, shares of Capital One, Discover, and other companies eyeing mergers experienced a boost, indicative of the market’s reaction to a potentially more favorable regulatory environment for consolidation.