Walmart-backed fintech company, One, has recently launched a buy now, pay later (BNPL) option for big-ticket items at its U.S. stores. This move puts One in direct competition with Affirm, the current exclusive provider of installment loans for Walmart customers. It also signifies One’s ambition to become a financial superapp, offering a wide range of financial services in one platform.
Since its establishment in 2021, One has been operating in stealth mode, developing various products including a debit account. Now, with the introduction of BNPL loans, One is going head-to-head with Affirm and other partners of Walmart. The loans are available for purchases starting at around $100 and costing as much as several thousand dollars, with an annual interest rate between 10% to 36%.
Buy now, pay later options have gained popularity among consumers, driving $19.2 billion in online spending from January through March of this year alone. One’s expansion into lending raises the possibility of forcing Affirm and other third parties out of partnerships with Walmart, potentially positioning One as the dominant player in American retail.
Walmart has been making efforts to diversify its revenue sources beyond its retail stores, following the footsteps of rival Amazon. The acquisition of TV maker Vizio and the development of One are part of Walmart’s plan to grow profits faster than sales and enter new segments such as finance and healthcare.
One’s approach of offering no-fee services is particularly relevant to low- and middle-income Americans who are underserved financially. The company aims to digitize many of the physical services offered by Walmart and become a major player in financial services. According to Morgan Stanley, One could generate over $1.6 billion in annual revenue from debit cards and lending, and potentially more than $4 billion if it expands into investing and other areas.
There are indications that One is also making a deeper push into lending beyond installment loans. Walmart recently won a legal dispute with Capital One, which could pave the way for One to take over management of Walmart’s co-branded and store cards. This move would position One as a direct competitor to Capital One in providing credit and payment products to Walmart customers.
While One’s expansion threatens to overshadow Walmart’s existing financial partners, it also serves as a defensive measure against fintech players like Cash App, PayPal, and Chime, which have gained significant traction among Walmart’s core demographic. One has the advantage of being majority-owned by Walmart, allowing it to offer enticing benefits and rewards to customers within the Walmart ecosystem.
Overall, One’s introduction of the BNPL option and its ambition to become a financial superapp indicate a brewing battle in the financial services landscape of America’s largest retailer. With its vast customer base and strategic partnerships, One has the potential to disrupt the industry and reshape the way consumers manage their finances.
