By Jeff Domansky, Jan 13, 2021
Walmart announced plans for a new fintech startup that could soon offer its 265 million weekly customers a basket of fresh new financial products like those available from other successful fintech startups.
The announcement offered no initial details on potential services, acquisitions, investments, or timeframes. Still, Walmart’s strategic partner is San Francisco-based VC group Ribbit Capital, which has invested millions in several early-stage fintech disruptors, including Affirm, Checkout.com, Robinhood, and others.
Walmart will be the majority owner of the new entity and says it will grow its fintech expertise through a mixture of partnerships and acquisitions of other fintech companies
“For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs. And they’ve made it clear they want more from us in the financial services arena,” John Furner, president, and CEO, Walmart US, said. “We’re thrilled to work with Ribbit Capital in a new venture to help us deliver innovative and needed options to our customers and associates – with speed and at scale.”
Walmart already offers a variety of financial services
The global retailer already offers a shopping cart full of financial services including:
- Walmart Mastercard cashback rewards credit card with Capital One
- a prepaid debit card called MoneyCard in partnership with Green Dot Bank
- Bluebird American Express, Bluebird Visa, NetSpend Visa, GoBank, MyVanilla, and other reloadable debit cards
- a Walmart Pay app
- domestic and international money transfers through Ria and MoneyGram
- installment financing via buy now pay later fintech lender Affirm
- bill pay services for 15,000+ companies, powered by CheckFreePay and MoneyGram
- also, check cashing, money orders, gift cards, and even check printing for those still clinging to a checkbook.
Walmart has limited experience with fintechs so far. It works with Affirm, which provides lending services for shoppers who want to buy now and pay later. In early 2020, San Jose fintech PayActiv began offering an app with an early-pay loan and savings account services to Walmart employees.
Scott Benedict, director of retail studies at Texas A&M University, said the partnership is a smart move by the company. “Walmart can benefit from this move into more services, and it will be interesting to see the applications that come out of the new startup. I expect the focus will include services for customers and suppliers,” Benedict said.
As we covered in PaymentsNEXT, Walmart invested $3.5 billion last year in blockchain technology for its Canadian stores in a five-year strategy to generate big savings through automation across its entire logistics and supply chain.
A similar upside could also be waiting for Walmart by offering fintech services and integrating its financial dealings with suppliers, business partners, customers, and merchants on its e-commerce platform in the US and around the world.
Who is fintech partner Ribbit Capital?
Walmart’s partner Ribbit Capital launched in 2012 and has raised $1.3 billion for 11 venture investment funds, making 116 investments and leading in 39 of them to date, according to Crunchbase.
Investments in the US include a big shopping basket of fintech disruptors including no-fee mobile investment platform Robinhood; credit score company Credit Karma; buy now pay later lender Affirm; payments app Brex; payday app Earnin; Gusto payroll/benefits app; challenger bank Upgrade; digital mortgage app Tomo; lending app Figure; Hippo insurance services; Invoice2go payment app; Point home equity loans; Root car insurance app; Cross River banking-as-a-platform; and Wealthfront banking app.
Ribbit’s international investments include UK financial services solution Raisin, global virtual bank Revolut, and mortgage app Habito; German financial platform and mobile banking app Vivid Money and credit score app Bonify; money management app Digit; Indian payment processor Razorpay, bill pay service CRED, epiFi financial services, Groww investment app; and retail payment service provider BharatPe; Brazil’s Nubank, Cora business financial services provider, Guiabolso, Gorila, and Warren investment apps; Chinese expense app Decibel; global “un-banked” banking app Tala; South Korea’s banking app Toss; Argentina’s Uala banking app; and Africa’s Chipper Cash sending service.
Clearly, Ribbit knows its way inside fintech in the US and around the world.
“Walmart has a relationship with millions of customers and associates built on trust, security, and integrity,” said Meyer Malka, managing partner, Ribbit Capital. “When we combine our deep knowledge of technology-driven financial businesses and our ability to move with speed with Walmart’s mission and reach, we can create and deliver financial offerings that are second to none.”
Fascinating fintech future ahead
Walmart tried to acquire a banking license in 2005 through a controversial industrial loan company but withdrew its application two years later after widespread industry opposition and some resistance from regulators.
Fintech has changed everything, and maybe the time has come for Walmart. However, lawmakers, banks, and credit unions may have mixed feelings about large corporations moving further into financial services and banking.
Yet I can’t think of a more unlikely partnership than old-school but trying to be e-commerce relevant Walmart and a warp speed fintech financial investor like Ribbit Capital. But that’s life in the financial services fast lane in 2021.
Despite a few past missteps, Walmart has proven it can compete and grow its e-commerce business through acquisitions of talent and companies. It has the customer base and potential scale to carve out and build a fintech business even if some of its budget-conscious, in-store shoppers are less than tech-savvy.
The big question is, can Walmart move fast enough to make the right acquisitions, launch the right products at the right time, and reach the right customers?
You can read Walmart’s initial announcement here.
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