Walmart's Fintech Startup One Launches Buy Now, Pay Later Loans at Select U.S. Stores

Walmart's fintech startup One has introduced buy now, pay later (BNPL) loans for expensive purchases at select U.S. stores, according to a CNBC report on April 25, 2024. The new BNPL service allows customers to split the cost of purchases over $150 into multiple payments, providing an alternative financing option for more expensive items.

One has begun offering BNPL loans for big-ticket items like electronics, jewelry, power tools, and automotive accessories at some of Walmart's more than 4,600 U.S. stores as it prepares for a bigger push into lending. However, items such as groceries, alcohol, and weapons will not be eligible for the BNPL facility.

This move by One, which is majority-owned by Walmart, aims to provide customers with more flexible payment options for costlier purchases at the retail giant's stores. It is part of Walmart's broader strategy to expand its financial services offerings and compete with other retailers and fintech companies in the growing BNPL market.

Why this matters: The introduction of One's BNPL service at Walmart stores presents direct competition for Affirm, which has been Walmart's exclusive BNPL partner since 2019. This development signals a brewing battle in the store aisles and e-commerce portals of America's largest retailer, with the role of various players, including fintech firms, card companies, and established banks, at stake.

One's expansion at Walmart raises the possibility that it could force out Affirm, Capital One, and other third parties from some of the retailer's key partnerships. For Walmart, One is part of its broader effort to develop new revenue sources beyond its retail stores, including in finance and healthcare, following the playbook of rival Amazon.

BNPL loans, which shoppers repay in a handful of installments, have been steadily gaining popularity and drove $75 billion in online spending in 2023, according to Adobe Analytics. BNPL providers like Affirm and One partner with retailers like Amazon.com and Walmart to finance customer purchases, earning a commission on the sale and interest on the loan.

Walmart recently expanded its relationship with Affirm, introducing it as a payment option at Walmart self-checkout kiosks. Analysts estimate One could generate around $1.6 billion in annual revenue from debit cards and lending in the near term, and potentially over $4 billion if it expands into investing and other areas.

Key Takeaways

• Walmart's fintech startup One introduces BNPL loans for purchases over $150 at select U.S. stores.
• One's BNPL service competes with Affirm, Walmart's exclusive BNPL partner since 2019.
• One's expansion at Walmart could force out Affirm, Capital One, and other third parties from key partnerships.
• BNPL loans drove $75 billion in online spending in 2023, according to Adobe Analytics.
• Walmart recently expanded its relationship with Affirm, introducing it as a payment option at self-checkout.