Posted on 02/20/2024 5:59:27 AM PST by Red Badger
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Capital One trying to shore up their balance sheet.
They have a lot of lower credit rating card customers and Discover has fewer lower rated customers and more higher rated customers.
For the eonomy, for the credit industry, for competition is this merger needed? I doubt it.
Sounds like the K-Mart/Sears merger all over again.............
-PJ
“Sounds like the K-Mart/Sears merger all over again.....”
I don’t think so. I think both are companies that are and would be strong enough and viable without the merger. I think Capital is the one who would gain the most, and I think it is not necassary merger for Discover. It’s toally a “Wall Street enginered” merger 100% for the benefit not so much to Discover, the company, but just Discover’s stockholders.
Capital could without any merger with anyone, begin changing its portfolio of customers and become less dominant in the lower credit rating customers. I think that would even be cheaper than the merger with Discover.
I am not a free enterprise thinking person who automatically thinks there is never anything wrong with “bigger”.
Yes, consumer prices should reflect what an industry can do best to hold them down, but it can be asked “hold them down to what”. The forty+ year race focused 100% on just “holding consumer prices down” emptied the U.S. of many industries and built up China as an industrial powerhouse.
Cheaper everything does not necessarily mean better in the long run. Jobs, having jobs, is every bit as important.
Yes, jobs, how many layoffs when the final shakeout happens.....................
You have to understand how the business is structured. Visa and MasterCard are payment networks, that provide services to the bank issuers. The banks that issue the cards set the interest rates and credit limits, and loan the money. Visa and MasterCard just process transactions and collect fees. Many people complain these fees are two high, and that Visa and MasterCard are monopolies
Now Discover has its own network, but it’s only used by Discover. What Capitol One has said is that they will run their own card business through this network, and open it up to other banks. This will provide a third competitor for Visa and MasterCard, and force them to lower fees.
Well, that’s how they’ll spin it. They will definitely make more money on their own cards if they have their own network, and don’t have to pay Visa or MasterCard their fees.
Thanks. Do you know how the relationships between the banks and the cards work? Who pays who?
Does Capital One pay MasterCard to use their networks, or does MasterCard give Capital One a slice of the merchant fees to get their customers?
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