new York
Cnn
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There could very soon be a new larger credit card company in the United States.
Capital One (COF) received approval from the Governors’ Council of the Federal Reserve and the Currency Controller Office to acquire and merged with Discover Financial Services (DFS), agencies announced on Friday.
To obtain a complete approval, Capital One must provide the OPC with a plan “to approach the underlying deep causes of any unanswered application against Discover Bank and the damage repair plans”.
The All-Stock agreement, announced for the first time more than a year ago, would give Capital One a slight lightness against banks by issuing competing credit cards such as JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C), which do not deal with transactions themselves.
He would also give Capital One a new source of income for the costs of merchant she receives.
For customers of existing discoveries, this decision could increase the acceptance rates of merchants. But there is also a risk that they can deal with higher interest rates of the credit card.
Compared to the other major credit card issuers, Capital One has historically welcomed customers with credit ratings in the 600s range, which is considered a subprime. Since these borrowers are considered more risky, they tend to be billed higher interest rates compared to more scores.
When signing the agreement, the Fed announced that it concluded a consent order with Discover and billed to discover a penalty of $ 100 million “to overload certain exchange costs from 2007 to 2023.”
Under the Biden Administration, the prospects of the agreement receiving the approval of the Ministry of Justice were much thinner, given the overall position of the antitrust administration of the administration.
But the Trump administration was largely considered to be much more friendly. Immediately after the November victory of President Donald Trump last year, the capital actions One and Discover increased, as well as actions of other companies which were trying to merge – or which had previously canceled the transactions.
