Capital One could be excluded from the proposed Credit Card Competition Act of 2023 if its acquisition of Discover Financial Services goes through and the bank creates an in-house processor. 

Read more on the Capital One, Discover deal

The proposed act, introduced in June 2023 by U.S. Sen. Richard Durbin, D-Ill, would require credit card issuers with assets over $100 billion, such as $3.9 trillion JPMorgan Chase and $2.4 trillion Citi, to allow transactions to be processed on at least two networks, according to congress.gov. 

However, the act provides an exclusion for an issuer processing transactions on its own network, such as American Express, Dave Grossman, founder of credit card aggregator yourbestcreditcards.com, told Bank Automation News. 

“If [the act] were to pass, Amex would get a big advantage over cards issued by Visa, MasterCard [because] … a vertically integrated bank issuer processor does not need to offer an alternate network at the point of sale,” Grossman said.  

With the acquisition of Discover, Capital One could build a closed loop for itself that looks like American Express, Matthew Goldman, founder and president of Pasadena, Calif.-based consulting firm Totavi, told BAN. With its own network, the bank could issue cards, enter into deals with merchants and change pricing, features and technology without going through another party.  

“Capital One might be playing chess in 4D, meaning they are anticipating regulatory change, which will leave Cap One in an infinitely better position than they were before this acquisition,” Grossman said, noting that he is not speculating on the motives of the Capital One deal.  

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