The Walmart website is viewed on a laptop in the background with a hand holding a bank card.
Rafael Henrique | Light Rocket | Getty Images
A Walmart-backed startup wants to compete with buy-now-pay-later companies.
According to a source familiar with the matter, the company, dubbed One, is preparing to launch its own version of the payment service as early as next year.
One, which is majority-owned by Walmart, would like to launch a service that shoppers could use on Walmart’s website and stores, as well as at other retailers, the source said. The effort was motivated in part by a tougher economic environment and consumers’ feelings of being constrained by inflation.
Buy Affirm stock now, pay later fell on Friday. Walmart declined to comment.
One is breaking into the growing payment services category as monthly retail sales numbers continue to rise, but some Americans are showing signs of strain from inflation, which is pushing up the prices of groceries, homes and more. These stretched wallets could encourage consumers to pay for purchases in other ways. Buy now, pay later allows customers to gradually pay off a purchase with fixed monthly installments plus interest.
Retail executives, including Walmart CEO Doug McMillon, have talked about how even wealthier consumers feel trapped by inflation. About 75% of the retailer’s grocery market share gains came from households that made more than $100,000 over the past two quarters.
In a CNBC interview this week, McMillon said customers were feeling stressed.
“We have some more price-sensitive customers who have been under inflationary pressure for months,” he told CNBC’s “Squawk Box.” “This continued pressure in some categories I think is something that customers will have to contend with as we approach Christmas.”
News of the Walmart-backed startup’s interest in Buy now, pay later was first reported by The Information.
Walmart, the nation’s largest private employer and largest grocer, has long offered financial services in many of its stores. It has a money center where customers can get banking related services such as B. printing checks, sending or receiving money, or loading prepaid debit cards. Many of these services cater to lower-income families who don’t have connections with a traditional bank or don’t have the credit history to qualify for credit cards.
Last year, Walmart went a step further by founding and backing a fintech startup with Ribbit Capital, one of the investment firms behind Robinhood. The fintech startup is independent, but Walmart has the largest stake. The board also includes several top executives, including Walmart US CEO John Furner and chief financial officer John David Rainey. Rainey, Walmart’s new CFO, recently joined the board and is the former CFO of PayPal.
Since Walmart founded and supported the startup in early 2021, it has grown. Earlier this year, the company acquired two other fintech startups, One and Even, for an undisclosed amount. It took the name One and aims to be an all-in-one app for consumers to manage their money.
One is headed by Omer Ismail, who ran Goldman Sachs’ consumer bank. It also includes some other Goldman veterans.
Buy now, pay later has become a crowded arena, with companies like Affirm, PayPal, Klarna, and AfterPay all offering their own versions. Apple also announced plans to launch its own buy now, pay later option, Apple Pay Later.
Walmart already offers its customers a “buy now, pay later” option through Affirm. Ahead of the final holiday season, it ended its layaway program and replaced it with buy-now, pay-later funding.
