Mastercard’s CEO announced that the card network has renegotiated a new services agreement with Capital One Financial, dispelling some questions about the future of its ties to that bank after its acquisition last year of rival Discover Financial Services.
The new pact may even hand some additional credit card work to Mastercard, according to comments from Mastercard CEO Michael Miebach during a company earnings call with analysts on Thursday.
“We extended our longstanding partnership with Capital One where we renewed our partnership in credit and we will be the network for a large portion of newly acquired credit accounts,” Miebach said in prepared remarks for the call. “And across their business, Capital One will continue to use several of Mastercard’s services.”
Miebach declined to offer additional details on the pact when he was asked about it by an analyst on the call.
Analysts and investors had wondered how the network’s relationship with that bank would change in the wake of Capital One’s move to purchase Discover in 2024. The deal was approved last year and created the largest U.S. credit card issuer.
The Purchase, New York-based network reported that fourth-quarter net income rose 17% to $4.1 billion over the same period last year as revenue rose 15% to $8.8 billion, according to the company’s earnings report.
Miebach and Chief Financial Officer Sachin Mehra said consumer spending remained resilient despite some macroeconomic uncertainty, including in geopolitics.
As for political moves in the U.S., Miebach criticized ongoing efforts in Congress to push through the proposed Credit Card Competition Act during the company’s earnings call Thursday.
When asked about the bi-partisan bill pending in the Senate and House, he argued that the legislation would change the credit card processing system in a way that creates risks without providing benefits. He also noted that “little progress has been made” on the legislation.
“There’s a very united opposition to this proposed bill as the benefits of the bill are yet to be proven while the risks are pretty clear,” Miebach said in answer to a question about the legislation from an analyst on the earnings call.
The CEO said that the industry continues to work with Congress members to make sure they understand the impact of the bill, noting that it doesn’t really spur competition in his opinion.
“This has been discussed in the context of affordability, but there is no particular consideration in this bill to actually pass on any savings [to consumers],” Miebach said. On the other hand, “there’s a big topic that is often overlooked and that is the potential risk to cybersecurity.”
The bill is designed to force banks that issue the cards to ensure that there is a third competitor available to merchants for processing credit card payments that isn’t one of the two titans in the market, namely Visa and Mastercard. Sponsors of the legislation expect that additional networks being provided would lead to lower interchange fees for merchants using the networks.
Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL) revived efforts to push the legislation through the chamber after President Donald Trump gave his backing to the bill on social media this month, prompting the senators to reintroduce the bill they’ve been touting for the past several years. A House companion bill was also reintroduced.
An effort this week by the senators to pass similar legislation in the form of an amendment to a crypto infrastructure bill that was being considered by the Senate Agriculture, Nutrition and Forestry Committee fizzled out.
The activity on the CCCA came on the heels of Trump separately calling this month for a temporary cap on credit card interest rates, reviving a campaign trail promise in the name of affordability for consumers. While he demanded that bank card issuers impose a 10% cap by Jan. 20, the bank and card industry largely ignored the idea, except to criticize it.
When asked about that topic, Miebach sidestepped the question to some extent, saying it was the banks that determine their interest rates, but he did note that conversations about low-cost or introductory credit card rates are taking place.
“It's a broad conversation that's going on across the industry, leaning in on the topic of affordability and options around that, so I think overall, the constructive dialog that was sparked,” Miebach told analysts.
