Capital One is Losing its Travel Dominance

Capital One acquired Discover back in February, beginning its journey to become a more vertically integrated credit business. As a first step of this transition, Capital One has reissued all its debit cards to use the Discover network instead of Visa. Domestically this is unconcerning, Discover is well represented in the US. Capital One’s credit cards are still Visa based, so nothing significant has changed there either. But how does this impact travel abroad? What happens when you’re in a country that values cash over credit at most places of business? Capital One has created significant friction for its traveling clientele, which spells trouble for them given their focus on travel based cards.

Capital One’s flagship credit cards are mostly travel based. The Venture Card, their most popular credit card is specifically geared to give 2x “miles” on all transactions, which can be redeemed on any travel related purchase. Their new Venture X card, an Amex Platinum / Chase Sapphire competitor, goes deep on Miles for intro offers, and has travel related perks like a credit for travel expenses and Clear / TSA Precheck. It’s safe to say that the core demographic of Capital One customers enjoys travel, and wants to have benefits geared towards that. So how does the new Discover based debit card impact this? And what does the future look like Capital One credit cards in a Discover based world?

Case Study: Thailand and Bangladesh

I recently had a chance to test out this future. I traveled to Dhaka, Bangladesh for a friend’s wedding (which was a blast) and stopped in Thailand on the way in and out. Something you should know about each of these countries: they value cash. Most restaurants, stores, public transit, even Uber/Grab rides are paid for with cash. While many stores do not accept any credit cards, the most commonly accepted credit network by far was Visa, with a somewhat strong presence of Mastercard second. I was able to use my American Express maybe 2 0r 3 places, and Discover was completely unheard of. So when cash is king, access to withdrawing cash is important. How possible is it to navigate this trip?

Pre-travel jitters: Discover ATMs don’t exist

Before hopping on 28 hours of flights, I decided to play it smart and see what ATMs exist in Thailand and Bangladesh. According to Discover’s official website there were zero Discover ATMs in Bangkok, Dhaka, and Chiang Mai. It appeared the entire nations of Thailand and Bangladesh each do not support this network. Now, the savvier Capital One customers might notice that the new debit cards also support the “Diners Club” network, which allegedly, is more supported abroad. Thinking I had cracked the code, I checked their website. This led to the same outcome. Nothing in Thailand, nothing in Bangladesh. Great. To confirm, I called Capital One support. They appeared to use the same sites as I did. They confirmed that there were no ATMs that one could withdraw cash from. When I asked how I might get local currency once there, they asked for a few minutes to check, then hung up with no explanation. Top tier customer service. I decided to withdraw quite a bit of cash while still in the US in order to convert it once abroad. The net result of this is I now had to estimate exactly how much cash I would need in two different countries I had never been to, for over 3 and a half weeks of travel, as there are no guarantees that I’ll be able to get more there, and even strong evidence pointing to the contrary. The net result being that I’m now walking around with a very muggable amount of money. (When I got Cholera in Dhaka, I found out that the USD actually goes a very long way, and it basically saved my life, but that’s a story for another time).

Bangkok, Thailand: Not impossible, but not everywhere

Bangkok is the largest city in Thailand. It is the economic center of the nation, and where most business is conducted. If there ever was a place where a debit card should work, this would be it. Like all Thailand trips, I started my quest to withdraw cash by going to 7 Eleven. A thing about Thailand, 7 Eleven is the holy land. It has everything a tourist needs, and always has at least two different types of ATMs in front of it. K Bank seemed to be the most common, and most popular. This ATM did not accept the debit card. This was the case with most other ATM networks. After much trial and error (and about 30 minutes of walking), I found a Bangkok Bank ATM which accepts Discover, and was able to withdraw cash. So while it took some initial effort, it was actually quite doable to use Discover in Bangkok. The experience wasn’t perfect: I had to walk farther, and was limited to only one network of ATMs. This required me to withdraw more money, to avoid the risk of not having it, if I end up in a part of the city that might lack one. It was also a source of unnecessary anxiety that Discovers own list of ATMs doesn’t list these ATMs, even when they support the network.

Dhaka, Bangladesh: First try, bullseye

I landed in Dhaka late afternoon. After my cash first experience in Thailand, I figured I should find an ATM first thing to ensure I can get around and try all the incredible street food and other experiences that the country has to offer. This was good too, as the city itself is largely non-computerized. If you want to get on a bus, there’s an actual human who sits at the bus stop and sells you paper tickets. Rickshaws are cash only, and Ubers don’t accept Visa or Amex even if it’s saved properly in your account. If you want to get around in Dhaka, you need cash.

Given my previous experience, I headed to a major bank in Banani, one of the nicest neighborhoods in Dhaka, because if there was a place that would support the Discover network, it would be there. This instinct was correct. I was able to get Bangladeshi Taka, their local currency, at a bank called EBL Skycare and I was off. Things were so affordable in Bangladesh, that I didn’t have a reason to withdraw money a second time. But for whatever its worth, Discover exists in at least one place in the city.

One interesting currency experience from Bangladesh: Leaving the country and trying to trade my remaining Taka for USD or Thai Baht was impossible. No bank or currency trading business was interested in my Taka, and many hadn’t even heard of it. Oh well, I’ll keep a bill as a fun memory.

Chiang Mai, Thailand: Lessons learned from Bangkok

If Bangkok is an overwhelming metropolis, then Chiang Mai is a safe, cozy mountain town with more tourists than people. Having my previous experience in Bangkok, I knew that Bangkok Bank ATMs work with Discover, and not much else does. There are less of these ATMs in Chiang Mai but they exist and are a 10–20 minute walk away from wherever you seem to be. At least this is true in the central old city. The only notable problem I had was that the first ATM I walked to was out of service. Requiring a now 30 minute walk in the other direction. Interestingly I found an ATM that had the discover logo at a 7 Eleven along the way, but it did not actually support the transaction, cancelling at the very last step after selecting an amount to withdraw. This was a repeatable error. I wish I remembered which ATM network this was, but suffice it to say not all Discover ATMs actually support Discover.

Takeaways

By switching to the Discover network from Visa, Capital One has created significant, but not insurmountable friction for its travel focused customers. It has limited where customers can get cash abroad, causing them to have to walk further and plan ahead instead of having the confidence of the Visa network. It also lacks correct information about where ATMs do exist. This is not only true for their customers, but even their internal support staff, who don’t seem to be aware that Discover ATMs do exist abroad. This customer experience creates additional anxiety and loses trust that the Discover acquisition is in their best interest.

When Capital One migrates is Credit Cards to Discover, this will get worse, as Visa isn’t even universal abroad, and Discover is largely unheard of as a card payment method beyond the US. So how do we avoid tarnishing the reputation of the travel focused Credit company?

The fix

Capital One can do a few things to make this experience better. First, they can have correct information about ATM availability abroad. This will relieve anxiety, and help their customers spend less time searching for a possible point of withdrawal. Second, they should push for more ATM networks to support Discover. They bought the network, it’s now their job to make it as common as Visa. If not, they will never be as competitive as the Visa network they left, and Capital One customers will always be second class citizens. If that’s not possible, then patterning with more payment networks is also a possibility. Capital One already supports Discover and Diners Club, what other options will increase coverage abroad? There are many and if having the biggest isn’t possible then a mesh of the others might make up for it.

In the meantime, international travel with Discover is possible if not totally convenient. Be careful, plan in advance, and don’t accept the existing information as the truth can be different than what’s presented.

What’s your experience been? Let me know in the comments

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