by Jackie Navarrete
What is the Capital One + Discover Deal? What it means for the future of payment processing?
On April 19, 2025, the U.S. banking industry took a historic step: regulators officially approved Capital One’s $35 billion acquisition of Discover Financial Services. At first glance, this might seem like just another big bank merger. But beneath the headlines lies a shift that could transform how payments move—affecting not just Wall Street, but Main Street businesses like yours.
So what does this mean for the future of payment processing? And more importantly, how could it impact your small business?
At Velocity Merchant Services (VMS), we believe this merger is a wake-up call. As the payment landscape gets swallowed up by mega-institutions, independent business owners need to understand what’s happening—and why working with an agile, service-first processor is more important than ever.
Let’s break it down.
The Players: What Does Capital One Actually Gain?
Capital One is already one of the largest credit card issuers in the United States. But here’s the catch: nearly all their cards run on Visa or Mastercard’s networks. That means every swipe goes through another company’s system, with network fees flowing to those payment giants.
Discover, on the other hand, is more than just a credit card brand—it’s a self-contained payments ecosystem. It issues its own cards, processes transactions on its own network, and has its own network of merchants. It’s one of only four major U.S. payment networks (Visa, Mastercard, American Express, and Discover).
With this acquisition, Capital One no longer needs Visa or Mastercard to process its payments. It now owns the entire payment pipeline—from issuing the card to processing the transaction. This is called vertical integration, and it gives Capital One unprecedented control—and new competitive power in the payments industry.
What This Means for the Payment Processing Industry
This deal is not just about two banks merging. It’s about the reshaping of financial infrastructure, and it signals a growing trend: big banks are trying to own more of the payments stack—and potentially squeeze out independent players.
Here’s what that means:
1. More Consolidation
This merger follows a growing trend of consolidation across banking, fintech, and payment services. As more giants merge, there are fewer independent options for merchants. This can lead to less flexibility, higher fees, and slower innovation.
2. New Competition for Visa and Mastercard
If Capital One pushes merchants to adopt Discover over Visa or Mastercard, we could see a shift in the balance of power in the payments industry. More competition sounds good, but for merchants, it may bring confusion and new costs—like updating equipment, managing new fee structures, or juggling different network rules.
3. Potential Changes to Interchange Fees
Capital One now has the power to set its own interchange fees for Discover cards. This could lead to lower fees as a competitive strategy, but it could also result in confusing or variable pricing depending on which network a card uses.
How This Affects Small Business Owners
For the average small business owner, this merger might not change things overnight—but the long-term ripple effects are worth watching closely.
Here’s what you need to be aware of:
1. New Payment Offers Are Coming—But Are They Good for You?
Capital One may begin offering merchants special processing deals to accept Discover cards or use Discover-branded merchant services. On the surface, that could look attractive: “Lower fees! New incentives!”
But here’s the truth: bundled offers from big banks often come with fine print, complex rate structures, or lock-in contracts that are hard to escape from.
At VMS, we’ve seen it before—merchants jump at an offer from a big name, only to find themselves stuck with:
• Poor customer service
• Unexpected monthly fees
• Limited transparency in how their money is processed
We believe in giving you choices—not locking you in.
2. You May Start Seeing More Discover Cards at Checkout
If Capital One begins issuing more cards on the Discover network, cardholder usage may shift. You may notice more customers paying with Discover instead of Visa or Mastercard.
If you’re not already set up to accept Discover, or if your current terminal isn’t optimized for all networks, this could lead to declined payments, delays, or even lost sales.
VMS makes sure your system is ready for all major networks—no surprises.
3. There May Be Pressure to Switch Your Processor
Capital One might eventually use its new payment capabilities to offer merchant processing directly—especially to small businesses who already bank with them.
That may sound convenient. But here’s the reality:
• Big banks don’t specialize in small businesses.
• You’ll be routed to massive customer service queues.
• Your business becomes just another number in a national database.
At VMS, we’re built to serve small businesses—with real-time support, tailored hardware options, and next-day funding that keeps your cash flow moving.
The VMS Perspective: Why Independence Matters More Than Ever
When institutions as massive as Capital One and Discover merge, there’s one thing you can count on: they’re doing it for their benefit—not yours.
The larger the entity, the more layers of bureaucracy you face—and the harder it becomes to:
• Talk to a real human
• Get transparent pricing
• Adjust your setup to fit your business—not theirs
Velocity Merchant Services was built to be the opposite.
We believe small businesses deserve more control, not less. You should be empowered to choose the right terminal, payment structure, and support model. We give you tools, not contracts. Flexibility, not fine print.
Looking Ahead: What Should You Do Now?
You don’t need to panic—but you do need to stay informed.
Here’s how to stay one step ahead of these industry shifts:
1. Review Your Current Payment Setup
Make sure you:
• Can accept all major networks, including Discover
• Understand your interchange and markup fees
• Know who your processor is and how to reach support
If you’re unsure, VMS offers a free rate review and consultation.
2. Avoid Long-Term Contracts
With all the changes in the industry, the last thing you want is to be locked into a multi-year deal with a mega-bank whose priorities may shift.
Our month-to-month processing options are designed to keep your business agile.
3. Choose a Processor That Puts You First
At VMS, we’ve been helping small business owners thrive for over 20 years. Whether it’s same-day approvals, modern terminals, or honest advice—we’re here to serve you, not sell you.
Conclusion: The Future of Payments Is Shifting—But You Don’t Have to Get Left Behind
The Capital One–Discover merger is a massive move that will reshape the financial and payment processing landscape. But for small business owners, the biggest question isn’t what’s changing—it’s who’s really on your side.
Big banks will always do what’s best for their shareholders. At Velocity Merchant Services, we do what’s best for you.
If you’re ready to take back control of your payment processing—with transparency, trust, and tools built for small businesses—let’s talk.
For more insights like this, keep up with the VMS blog—where small business meets big tech without the fluff.
