Cars pass a Walmart store in Washington on August 18, 2020.
Nicholas Camm | AFP | Getty Images
Walmart said Monday that it is creating a fintech startup with Ribbit Capital, one of the venture capital firms behind Robinhood.
The retailer of large boxes did not share the name of the new company and did not say when its services will be available. The company said it would develop unique and affordable financial products for Walmart employees and customers.
Shares rose more than 2% in overtime news on Monday. Walmart has a market capitalization of $ 41
The fintech startup will be the majority owner of Walmart, and its board will include several company executives, including CFO Brett Biggs and Walmart CEO John Furner. He said he would also hire independent experts in the industry and could acquire or partner with other fintech companies.
“For years, millions of customers have trusted Walmart not only to save them money when shopping with us, but also to help them manage their financial needs,” Furner said in a news release. “And they have made it clear that they want more of us in the financial services arena.”
With more than 4,700 stores nationwide, Walmart interacts with millions of customers each year – including some who have no connection to a bank or financial advisor.
Six percent of adults do not have a check, savings or money market account, according to the Federal Reserve. About 16% are “insufficient bankers”, which means that they have a bank account, but also use alternative financial services products, such as a money order. These Americans are more likely to turn to short-term solutions, such as pawnshops or payday loans, which can lead to additional fees or high interest rates.
Walmart already offers some financial services to customers. For example, it has a Walmart MoneyCard, a prepaid debit card that customers can top up with money and use for purchases. The card has some features that promote money management or help people who may have a disputed credit history, such as no overdraft fees, no monthly fee and no minimum balance requirement.
The merchant also offers alternative payment plans for customers with a limited budget, such as deferral and Klarna, an online financial services option that allows buyers to buy an item immediately and pay in installments.
Walmart’s co-owner in the new company Ribbit Capital has a history of investing in fintech companies. His portfolio includes Robinhood, a free start-up investment; Credit Karma, a company that offers easy-to-use tools such as free credit rating checks; and Affirm, a financial lender that offers customers alternative payment options such as buying now and paying later.