Capital One believes Discover deal will ramp up competition.

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Capital One aims to boost competition with its proposed acquisition of Discover for $35.3 billion, as reported by Reuters. The regulatory application filed by Capital One argues that the merger will not hinder competition in the credit card market, as the combined entity would only represent about 13% of credit card purchasing volume. The deal is expected to create a global payments platform with 70 million merchant acceptance points across more than 200 countries and territories, making Capital One the largest credit card issuer in the U.S. by balances.

In addition to expanding its market share and creating a potential rival to Visa and Mastercard, Capital One believes the merger will improve financial stability for Discover by investing in risk management. The company’s filing also highlights the historical market share decline of Discover over the past decade and how Capital One’s scale and volume could help it regain competitiveness. Furthermore, the deal could benefit consumers who live paycheck to paycheck, as both Capital One and Discover have experience in serving this demographic and the majority of credit cards are held by these consumers.

Despite these potential benefits, there has been criticism from lawmakers, with Rep. Maxine Waters and Sen. Josh Hawley opposing the Capital One/Discover deal and calling for it to be blocked. The concerns raised by some members of Congress reflect broader scrutiny of market dominance and competition in the credit card sector, suggesting that regulatory approval for the merger may face challenges in the future.

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