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Capital One to buy Discover Financial in $35B stock deal

reuters.com

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Re: Capital One to buy Discover Financial in $35B stock deal

#31

Post by pasttense01 »

lvl102 wrote: post #28
elevatedastalt wrote: post #15

Earlier quoted context omitted.

My feeling is Google / FB have done nothing close to Visa / MC when it comes to landgrabbing, but I am open to information / arguments.

I actually think it’s worse because it’s not as natural of a monopoly as it was for the payment network space. Google and Meta actively created a duopoly in the ad space and at a global scale too.

No. For many of us it irrelevant if there is duopoly in the ad space because we don't use Facebook and we use ad-blockers. But in the payment space VISA/MC charge high fees which are passed onto all consumers.

Re: Capital One to buy Discover Financial in $35B stock deal

#32

Post by sodality2 »

BadHumans wrote: post #6

I've always heard Discover was a good company to work for and they had the best customer support. Capital One is the opposite of both of those things so I hope the government steps in here.

To add more anecdata: C1 has all of my accounts from savings, checking, and two CC's. I've never had a problem. Their customer support has always helped.

That being said, all my eggs in one basket is terrible (though instant transfers + 4.35% savings is great - I keep about $30 in my checking and transfer over whenever a charge will go through, and thus maximize my interest gained!)

Re: Capital One to buy Discover Financial in $35B stock deal

#33

Post by przemub »

MuffinFlavored wrote: post #26
csnover wrote: post #13

Earlier quoted context omitted.

As far as I can tell, consumer interchange fees in the US are significantly higher than they are in Europe. The interchange fees for Visa and MC consumer products within the EEU are 0.2–0.3%[0][1], whereas in the US they are from 1–3%[2][3]. [0] https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PD... [1] https://www.mastercard.co.uk/content/dam/public/mastercardco... [2] https://usa.visa.com/content/dam/VCOM/…

I asked ChatGPT about this. It said for interchange portion, sure. I'm not sure if EU payment processors finds a way to make it up in different portions of the fees so that it evens out to the same 1-3%?

Not really, no. It's more than enough for them to operate on. The only downside from the American point of view is that banks very rarely offer cashback, points, etc.

Re: Capital One to buy Discover Financial in $35B stock deal

#34

Post by ecshafer »

jsyang00 wrote: post #8
MuffinFlavored wrote: post #3

> The deal, which is expected to receive intense antitrust scrutiny, So... it is highly possible/more than likely it will not go through?

basically deal goes thru is p(republican admin takes over) + p(win in court) + p(settlement deal of some sort).

The current (democrat) president was a Senator from Delaware whose nickname was "Credit Card Joe" because he was so friendly to the credit card companies which are big powers in his state. Partisan politics aside, Joe Biden's been known since the 80s as an extremely pro bank and credit card politician.

Here are some Left leaning articles on the matter: https://www.motherjones.com/politics/2019/11/biden-bankruptc... https://www.propublica.org/article/bidens-cozy-relations-wit...

Re: Capital One to buy Discover Financial in $35B stock deal

#35

Post by lvl102 »

pasttense01 wrote: post #31
lvl102 wrote: post #28

Earlier quoted context omitted.

I actually think it’s worse because it’s not as natural of a monopoly as it was for the payment network space. Google and Meta actively created a duopoly in the ad space and at a global scale too.

No. For many of us it irrelevant if there is duopoly in the ad space because we don't use Facebook and we use ad-blockers. But in the payment space VISA/MC charge high fees which are passed onto all consumers.

Well in the ad space, we are talking about ad buyers not so much consumers. I think a good analogy would be if ABC and NBC purchased all other broadcasters and cable channels in the 80s. And then they go and purchased all INTERNATIONAL broadcasters.

Re: Capital One to buy Discover Financial in $35B stock deal

#36

Post by xp84 »

toomuchtodo wrote: post #16
lvl102 wrote: post #11

Visa and Mastercard and their highly anticompetitive tactics early in the network landgrab for the payment card space foretold what would happen in the tech space (that is to say do whatever you can to win the landgrab which is exactly what Google/FB did). DFS never caught on. Now the landscape has changed and this deal sort of serves as a bookend. People in fintech should go after the Visa/MC monopoly. There is no “…

https://www.axios.com/2023/07/22/fednow-instant-payments-cre... Networks (credit card rails) are dead long term. Capital One is buying a less than prime customer base instead of organic growth (plus the deposits). The profit is in the revolving interest on a customer base that carries a balance, not the interchange and network. https://investorrelations.discover.com/newsroom/press-releas... This should come as no sur…

Regarding your New Republic link:

I find a lot of these kinds of critiques of subprime lending to be disturbingly patronizing. The notion that some third party (the government, presumably) ought to be decreeing that people whose credit is (in this article’s words) so bad that they can’t qualify for a $300 limit at 27% interest, should just not be allowed to access legal credit at all. Terms get worse as you prove you’re an unwise risk. That’s just math. If you ask the people who are opening these credit cards, they’ll tell you that yes they do want the credit. They would rather have that than not have it. And they’re adults. And suspiciously, it’s only years after voluntarily taking this money that some of them turn around and complain about “predatory lending.”

If we ban all forms of subprime (or make it impossible with interest rate caps, etc) the most desperate bad-with-credit people, whom we’re supposedly trying to protect, will still find a way to borrow money anyway, at far worse terms—this is what loan sharks do. You can’t fix humans with regulation.

Re: Capital One to buy Discover Financial in $35B stock deal

#37

Post by ryukoposting »

xp84 wrote: post #36
toomuchtodo wrote: post #16

Earlier quoted context omitted.

https://www.axios.com/2023/07/22/fednow-instant-payments-cre... Networks (credit card rails) are dead long term. Capital One is buying a less than prime customer base instead of organic growth (plus the deposits). The profit is in the revolving interest on a customer base that carries a balance, not the interchange and network. https://investorrelations.discover.com/newsroom/press-releas... This should come as no sur…

Regarding your New Republic link: I find a lot of these kinds of critiques of subprime lending to be disturbingly patronizing. The notion that some third party (the government, presumably) ought to be decreeing that people whose credit is (in this article’s words) so bad that they can’t qualify for a $300 limit at 27% interest, should just not be allowed to access legal credit at all. Terms get worse as you prove you…

I've railed on this topic in the past on HN. We've built a society where debt (credit, loans, etc) in some form is essential to virtually anyone's participation in the economy. Blocking poor people out of this system doesn't do anything to help them, nor does it meaningfully move the needle in terms of the total risk existing in our economy. Nobody is better off without Discover or Capital One.

Re: Capital One to buy Discover Financial in $35B stock deal

#38

Post by barkerja »

op00to wrote: post #10
BadHumans wrote: post #6

I've always heard Discover was a good company to work for and they had the best customer support. Capital One is the opposite of both of those things so I hope the government steps in here.

Amex treats me far better than Discover.

I second this, but Discover is a very close second. I've been a very happy Amex user for better part of a decade now.

Re: Capital One to buy Discover Financial in $35B stock deal

#39

Post by toomuchtodo »

xp84 wrote: post #36
toomuchtodo wrote: post #16

Earlier quoted context omitted.

https://www.axios.com/2023/07/22/fednow-instant-payments-cre... Networks (credit card rails) are dead long term. Capital One is buying a less than prime customer base instead of organic growth (plus the deposits). The profit is in the revolving interest on a customer base that carries a balance, not the interchange and network. https://investorrelations.discover.com/newsroom/press-releas... This should come as no sur…

Regarding your New Republic link: I find a lot of these kinds of critiques of subprime lending to be disturbingly patronizing. The notion that some third party (the government, presumably) ought to be decreeing that people whose credit is (in this article’s words) so bad that they can’t qualify for a $300 limit at 27% interest, should just not be allowed to access legal credit at all. Terms get worse as you prove you…

Colorado’s HB1229 became law, and several other states have pending consumer lending legislation capping rates at 25%. You can’t fix humans (especially when they’re forced to exist in this dystopian economic system), but you can reduce the exploitation with legislation. Even adults need protection, depending on circumstances, and their status as an adult isn’t a free pass to harm.

But heh, that’s just the law. We can change the definition of legal credit with the stroke of a pen (see above).

Re: Capital One to buy Discover Financial in $35B stock deal

#40

Post by MuffinFlavored »

przemub wrote: post #33
MuffinFlavored wrote: post #26

Earlier quoted context omitted.

I asked ChatGPT about this. It said for interchange portion, sure. I'm not sure if EU payment processors finds a way to make it up in different portions of the fees so that it evens out to the same 1-3%?

Not really, no. It's more than enough for them to operate on. The only downside from the American point of view is that banks very rarely offer cashback, points, etc.

> In Europe, credit card processing fees are generally lower compared to other regions, partly due to regulatory caps on interchange fees. For consumer debit and credit cards issued within the European Economic Area (EEA), the interchange fees are capped at 0.2% and 0.3% of the transaction value, respectively. However, total processing costs for merchants can be higher once all fees are included, often ranging from 1% to 2% per transaction.
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