Walmart-backed fintech, One, is venturing into the buy now, pay later (BNPL) market by offering installment loans for big-ticket items at its over 4,600 U.S. stores. This strategic move positions One in direct competition with Affirm, which has been Walmart’s exclusive provider of installment loans since 2019.
This development signals a potential battle in America’s retail landscape involving a range of players, from fintech firms to established banks and card companies. One’s foray into lending highlights its ambition to evolve into a comprehensive financial superapp, offering a one-stop solution for saving, spending, and borrowing money.
Founded in 2021 and led by Goldman Sachs veteran Omer Ismail as CEO, One has garnered attention in the financial industry while operating mostly under the radar. After launching its debit account in 2022, the fintech startup is now challenging Walmart’s existing partnerships, including its relationship with Affirm, which contributed to Walmart’s $648 billion revenue last year.
During a recent CNBC visit to a Walmart store in New Jersey, both One and Affirm were prominently featured alongside Apple products and Android smartphones. Customers can avail loans from either provider for purchases ranging from around $100 to several thousand dollars, with annual interest rates between 10% and 36%.
While electronics, jewellery, power tools, and automotive accessories qualify for these loans, groceries, alcohol, and weapons are excluded. The popularity of BNPL services has surged, with BNPL driving $19.2 billion in online spending from January through March, marking a 12% year-over-year increase.
Industry experts suggest that One’s growing presence at Walmart could potentially sideline Affirm, Capital One, and other third-party partners, reshaping the dynamics of American retail partnerships. With Walmart’s aim to diversify revenue streams beyond retail into finance and healthcare, One’s expansion aligns with Walmart’s broader strategy to grow profits faster than sales.
Walmart’s history of attempting to enter the banking sector dates back to the 1990s, facing regulatory challenges each time. This time, Walmart adopted a partnership strategy, forming a joint venture with Ribbit Capital for One and staffing the business with finance industry executives.
One’s no-fee approach aims to cater to low- and middle-income Americans, offering digital financial services that complement its physical offerings. With Walmart’s vast scale and customer base, One could potentially generate significant revenue and compete with established fintech players like Cash App, PayPal, and Chime.
As Walmart and One continue to innovate in the financial services space, their efforts could redefine consumer banking and lending, offering customers more choices and convenience within the Walmart ecosystem.
