Capital One just closed its $35 billion acquisition of Discover, and if it feels like no one’s really reacting, that’s because most people don’t understand what just happened… or they do and are pretending it’s not a problem. Some call this a merger, I call it the largest credit card issuer in the U.S. now owning one of the only independent payments networks left in the country. Which, in case you’re still trying to piece it together, means Capital One now owns the rails, the train, the station, and the guy screaming “all aboard.”

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Fifteen months of regulatory theater and gritted-teeth press releases finally culminated in a Sunday night “we did it” from Capital One CEO Richard Fairbank, who thanked everyone from Discover’s interim CEO to “thousands of associates” who presumably spent the last year trying not to make the deal look like a monopoly grab. 

But what Capital One now controls is not just a bigger loan book… They control the infrastructure. Discover’s network was one of the last non-Visa/Mastercard options that didn’t answer to someone else’s rules. And now it answers to Capital One. So when Fairbank says this merger is about “changing banking for good,” you can read that however you want. For consumers? For the company? For the industry? The press release didn’t specify. Nobody ever does.

(Source: PYMTS) 

A few weeks ago, Elizabeth Warren and Maxine Waters tried to stop this from happening by writing a letter and making some noise about how this would “harm consumers” and “leave merchants with no choice.” Were they right? Possibly (I can’t believe I just said that), but it doesn’t matter. Capital One now has the ability to issue cards, process transactions, manage the network, and squeeze both sides for margin. Visa and Mastercard have been doing this for years, but at least they weren’t also banks. Now you’ve got a bank doing it… with a retail footprint, a customer data pipeline, and a history of finding creative ways to explain why your savings account rate isn’t what you were promised.

Speaking of which, Capital One just paid out $455 million to settle a lawsuit for allegedly screwing depositors out of interest on their 360 savings accounts. That didn’t stop this deal either. Because again… nothing stops these deals. You can lie to customers, get sued, pay a nine-figure settlement, and still be approved to absorb a national payments network. Because, Wall Street. 

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Meanwhile, Discover’s leadership didn’t even put out a standalone statement. No press conference. Just folded into the deal and absorbed like it never existed separately. Customers are being told nothing is changing “for now,” which means everything will change, just not today. Eventually, you’ll get a new app, new terms, new branding, and a new explanation for why your cashback rate just got restructured into something you need a PhD to understand.

For Capital One, this is the endgame. They’ve been chasing scale, distribution, and infrastructure for years. Now they have all three. So this is clearly a BFD to them and to investors. Meaning, people calling this a “merger”, aren’t seeing the bigger picture. This is a takeover, and it’s about to print money for Capital One going forward. In the end, if you weren’t looking at Capital One yet, you might as well start. Things could get super interesting once the dust of this deal settles. Until next time, friends… 

P.S. Oh, I’m sorry, I didn’t know you liked getting rekt. Let’s face it, retail investors get the short end of the stick all day everyday. It’s the smart money’s world, and we are just living in it–only useful when it comes to liquidity purposes in the market. Meaning, if you’re as pissed off as I was when I found out Milli Vanilli was lip syncing the whole time, then it’s time to go from investing blind, to investing smart. Luckily for you, the key is right here as a Stocks.News premium member. Click here to see exactly how our premium members are printing while others quake in the face of today’s market chaos. 

Stocks.News does not hold positions in companies mentioned in the article.