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According to a source familiar with the matter, a Walmart-backed fintech startup plans to launch a buy now, pay later option as soon as next year.
The retail behemoth owns a majority stake in One, which is led by Goldman Sachs veterans.
It intends to launch the new payment method as some Americans experience financial strain as a result of rising food, housing, and other prices.
A Walmart-backed startup aims to compete with buy now, pay later businesses.
According to a source familiar with the matter, the One venture is planning to launch its own version of the payment service as early as next year.
One, which is majority-owned by Walmart, intends to launch a service that customers can use on Walmart’s website and in stores, as well as at other retailers, according to the source. The effort was spurred in part by a more difficult economic backdrop and consumers feeling squeezed by inflation.
Shares of the buy now, pay later company Affirm dropped on Friday. Walmart would not comment.
One is breaking into the expanding payment services category as monthly retail sales numbers continue to rise, but some Americans are feeling the pinch as inflation drives up food, housing, and other prices. Consumers’ interest in paying for purchases in other ways may be fueled by their stretched wallets. Customers can use buy now, pay later to pay off a purchase over time with fixed payments.
Even wealthier consumers, according to retail executives such as Walmart CEO Doug McMillon, are feeling squeezed by inflation. In the last two quarters, households earning more than $100,000 accounted for approximately 75% of the retailer’s grocery market share gains.
McMillon stated this week in an interview with CNBC that customers are stressed.
“We’ve got some budget-conscious customers who have been under inflation pressure for months,” he said on CNBC’s “Squawk Box.” “I believe customers are dealing with sustained pressure in some categories as we approach Christmas.”
The Information broke the story about the Walmart-backed startup’s interest in buy now, pay later.
Walmart, the country’s largest private employer and largest retailer, has long provided financial services in many of its locations. It has a money centre where customers can go to get banking services like printing checks, sending or receiving money, and loading prepaid debit cards. Many of these services are geared toward low-income families who do not have relationships with traditional banks or do not have the credit history required to qualify for credit cards.
Walmart went a step further last year by co-founding and funding a fintech startup with Ribbit Capital, one of the investment firms behind Robinhood. The fintech startup is self-sufficient, but Walmart has the largest stake. Several top executives serve on its board, including Walmart U.S. CEO John Furner and chief financial officer John David Rainey. Rainey, Walmart’s new CFO, is a former PayPal CFO who recently joined the board.
Since Walmart founded and funded the startup in early 2021, it has grown in size. It paid an undisclosed sum for the acquisition of two other fintech startups, One and Even, earlier this year. It was given the name One and intends to be an all-in-one app for consumers to manage their money.
One is led by Omer Ismail, who previously oversaw Goldman Sachs’ consumer bank. It also includes some former Goldman employees.
Purchase now and pay later has become increasingly crowded, with companies such as Affirm, PayPal, Klarna, and AfterPay all offering their own versions. Apple also announced plans to launch Apple Pay Later, its own buy now, pay later option.
Customers can already use Affirm to buy now and pay later at Walmart. Before the holiday season last year, it discontinued its layaway programme and replaced it with buy now, pay later financing.