Report: JPMorgan Considered ‘Company-Changing’ Discover Deal

Before Capital One acquired Discover Financial last month, J.P. Morgan Chase reportedly considered its own bid.

The country’s largest bank spent roughly a year exploring a deal to gain control of Discover’s payments network long before Capital One’s $35 billion purchase, the Financial Times (FT) reported Thursday (March 7, citing sources familiar with the matter. 

The sources said J.P. Morgan began pursuing its bid in the middle of 2021 but had jettisoned the project a year later after failing to sell Discover on the plan. 

A spokesperson for J.P. Morgan declined to comment when reached by PYMNTS.

The FT report notes that such a deal would have been harder to accomplish from a regulatory standpoint. The report also says that the fact that J.P. Morgan pursued a deal highlights its efforts to reduce its reliance on card networks like Visa and Mastercard.

“This would’ve been a truly company-changing deal,” one of the sources said.

The sources also said much of the focus was on acquiring Discover’s Pulse debit and cash machine network, which processed about $285 billion in payments last year.

Capital One announced last month that it was acquiring Discover, with the all-stock deal creating a global payments platform encompassing 70 million merchant acceptance points in more than 200 countries and territories.

And as PYMNTS wrote in the days following the acquisition, the deal is notable for reasons beyond its 11-figure price tag.

“Bringing the two credit card giants together would pave the path toward creating a banking giant with particular expertise in serving the paycheck-to-paycheck consumer well beyond the credit cards that have been hallmarks of both firms,” that report said.

Those paycheck-to-paycheck consumers represent a “formidable demographic,” PYMNTS noted elsewhere, with research showing that 62% of Americans fall into that category.

These consumers are found across a range of income brackets: 77% of those making less than $50,000 each year,  67% of people earning between $50,000 and $100,000 per year, and 45% of those making more than $100,000 each year.

This all assumes regulators approve the deal, something Thredd CEO Jim McCarthy said isn’t necessarily a given when speaking with PYMNTS recently. 

Regulators, that report said, are certain to tightly scrutinize the fact that the two companies would amass a substantial portion of the card issuing and payment networks business.

“There’s going to be a really long runway,” said McCarthy, “and Capital One has some hard decisions to make about what they will want to be with this combination of assets.”