Walmart-Owned One Gears to Become A Financial Superapp, Pushes Buy Now, Pay Later Scheme

By Moon Harper

Apr 24, 2024 05:33 AM EDT

Fintech One App — (Photo : Unsplash/Clay Banks)

According to a source on Tuesday, Walmart's fintech startup One, owned mainly by the company, now provides buy, pay later (BNPL) loans for large purchases such as electronics and power tools at select US stores.

Fintech's Competition at The Retail Chain

This action positions One directly against Affirm, the leading BNPL provider. Since 2019, Walmart has been the sole provider of installment loans for Walmart customers. The Bentonville, Arkansas, retailer recently expanded its partnership with Affirm by offering it as a payment option at Walmart self-checkout kiosks.

It also indicates that competition will likely emerge in America's largest retailer's physical store aisles and online platforms. Various players, including fintech firms, card companies, and established banks, will compete for a significant role in the market.

One's entry into the lending sector is the most evident indication of one's aspiration to transform into a financial super app, a comprehensive mobile platform offering a wide range of financial services, including saving, spending, and borrowing money.

Since its emergence in 2021, attracting Goldman Sachs veteran Omer Ismail as CEO, the fintech startup has captured attention and posed a threat to a financial landscape primarily controlled by banks. It has also drawn talent away from more established lenders and payments firms. However, operating mainly in stealth mode from its cramped Manhattan WeWork office, the company has been quietly developing its initial products, such as a debit account introduced in 2022. Today, One competes with some of Walmart's current partners, contributing to the retail giant's $648 billion revenue last year.

Buy now, pay later has become increasingly popular among consumers, both for everyday items and larger purchases, contributing $19.2 billion in online spending from January to March of this year, marking a 12% year-over-year increase, according to Adobe Analytics.

JPMorgan noted on Tuesday that Affirm will continue to be a funding option at Walmart but will likely compete directly with One at the point of sale (POS), suggesting that Walmart might prioritize promoting One more prominently at the POS.

The BNPL Option for Customers

Reuters reported Tuesday that Affirm has expanded its services beyond the competitive e-commerce market to offer buy now, pay later (BNPL) options for elective medical procedures.

BNPL providers like Affirm and One collaborate with retailers like Amazon.com and Walmart to finance customer purchases and earn a commission on the sale and interest on the loan. As per Adobe Analytics, BNPL loans have been increasingly popular, where shoppers repay in several installments, and drove $75 billion in online spending in 2023. Customers can use the service to purchase electronics, jewelry, power tools, and automotive accessories. However, groceries, alcohol, and weapons are not eligible for this facility.

One has been expanding its offerings to attract more customers. Last year, it introduced a savings account with a 5% interest rate, significantly higher than the national average of 0.4%, for balances up to $100,000.