Walmart's FinTech Waltz: A Digital Wonderland
Walmart, one of the world’s largest retailers by revenue, has always strived for a customer-first mindset. It is also one of the earliest non-banking stalwarts to bring contextual financial products to aid customers’ shopping experiences – a trend which we now call embedded finance. Since the 1990s, this has reflected in Walmart’s investments, partnerships, internal innovations, and acquisitions as the company has continued to deliver a broad omnichannel commerce experience to its customers. Walmart has upped the ante on its SuperApp ambitions, with its recent acquisitions of two FinTechs – Ever Responsible Finance and ONE Finance. We look at Walmart’s flirtations with financial products that spread well beyond 2 decades.
Initial Bets in Finance
Walmart’s attempts to diversify its offerings date back to early 2005—when the retail giant in partnership with GE Consumer Finance and Discover Financial Services—announced plans to launch a credit card that can be used both inside and outside Walmart stores. Soon after, it applied for a banking license as an industrial loan company (ILC) with the Department of Financial Institutions in Utah. However, given the pressure from the banking fraternity against Walmart’s advances in the sector, it withdrew its bank charter application within two years of filing. Outside of the US, it was granted a banking license in Mexico, and began operations in the second half of 2007 under the name Banco Wal-Mart de México Adelante. In the same year, in a bid to broaden its financial offerings, Walmart in partnership with GE Money and Green Dot launched MoneyCard, a reloadable prepaid Visa card that can be loaded and used instantly after activation and for which no bank account or credit check is required. Walmart’s courtship with card offerings continued, as in 2014, it announced that it has entrusted Mastercard to handle all transactions on its store-branded credit cards; and a few years later, entered into a partnership with JPMorgan Chase – where the US bank will start processing Chase Visa payments made at the retailer’s outlets through ChaseNet, a closed-loop processing network for Chase Visa cards.
A Rich Portfolio of Financial Offerings
With this partnership, the mega-retailer’s FinTech tryst was just getting started. It collaborated with PayPal to offer PayPal cash in and cash out money services at Walmart for an exclusive fee of $3 per service; and its partnership with Affirm meant that customers can use the FinTech to pay for their purchases over 3, 6, or 12 monthly installments. In 2019, Walmart partnered with CapitalOne to launch a new credit card program—that included both co-branded and private-label cards—with the former offering 5% back on purchases made on the retailer’s website or paid for in-store using Walmart Pay, while the latter offered the same perks, but only in the retailer’s outlets or website. It extended its partnership with Green Dot to not only continue serving as the issuing bank for Walmart MoneyCard for seven more years, but also agreed to jointly establish a new FinTech accelerator under the name TailFin Labs, LLC. It further diversified its offerings by entering the insurance segment with Walmart Insurance Services selling Medicare insurance plans during the Annual Enrollment Period in 2020.
SuperApp Strategy in the Reckoning
Encouraged by the success of these ventures, Walmart upped its FinTech ambitions in 2021. It teamed up with Ribbit Capital to create a new FinTech startup called ‘Hazel by Walmart’ – the name being ultimately revealed from its trademark application and having poached two veteran executives from Goldman Sachs to spearhead its operations. It partnered with PayNearMe to facilitate customers pay for their bills in cash through the Green Dot Network at Walmart outlets. In a further addition to its ever increasing arsenal of financial offerings, the retailer leveraged its partnership with Affirm to launch buy now pay later services for eligible customers; and teamed up with American Express to popularize Walmart+, which offers an array of perks and benefits to its platinum card members.
However, the retail giant is far from done in its quest to generate revenue beyond retail. On 26th January, it announced the acquisition of two FinTech startups, Even Responsible Finance and ONE Finance, a deal that is expected to close in the first half of 2022. Walmart’s constant strive for innovation and diversification have been pivotal in influencing its investment strategy, and the retailer’s aspirations are not just limited to creating a digital bank, but instead developing a financial services superapp providing a true digital ecosystem for its customers.