JPMorgan views Capital One’s (COF) acquisition of Discover Financial (DFS) as a negative headline for MasterCard (MA) and Visa (V). Capital One said it expects to deliver $1.2B in “network synergies” by 2027 by adding its debit portfolio and select credit portfolios to Discover, the analyst tells investors in a research note. The firm, however, expects any transition away from MasterCard and Visa would likely be slow and portfolio-by-portfolio. Acknowledging Discover’s network is much smaller, generating 2% the volume as Visa and MasterCard globally, it gives Capital One the optionality to negotiate away from or price-down the global networks over time, adds JPMorgan.
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