Cars drive past a Walmart store in Washington, DC on August 18, 2020.
Nicholas Comb | AFP | Getty Images
Walmart said Monday that a fintech startup is making it with Ribbit Capital, one of the venture capital firms behind Robinhood.
The big box dealer did not disclose the name of the new company, nor did they indicate when their services would be available. The company will develop unique and affordable financial products for Walmart employees and customers.
Shares rose more than 2% after close of trading on Monday. Walmart’s market cap is $ 416.7 billion.
The fintech startup will be majority-owned by Walmart and its board of directors will include several company executives, including CFO Brett Biggs and Walmart’s US CEO John Furner. It said it will also appoint independent industry experts to the board and may acquire or work with other fintech companies.
“For years, millions of customers have trusted Walmart not only to save money shopping from us, but also to help them manage their financial needs,” Furner said in a press release. “And they made it clear that they want more from us in the financial services sector.”
With more than 4,700 stores across the country, Walmart interacts with millions of customers each year – including some who have no relationship with a bank or financial advisor.
Six percent of adults have no checking, savings, or money market accounts, according to the Federal Reserve. About 16% are “under-banked,” which means 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 like a pawn shop or payday loan, which can result in additional fees or high interest fees.
Walmart already offers some financial services to customers. For example, it has Walmart MoneyCard, a prepaid debit card that customers can top up with money and use to make purchases. The card has some features that will promote money management or help people who may have poor credit ratings, such as: B. No overdraft fees, no monthly fee and no minimum balance requirement.
The retailer also offers alternative payment plans for customers on a tight budget, e.g. B. Layaway and Affirm, a fintech company that allows customers to instantly buy an online item and pay for it in installments.
Walmart’s co-owner of the new venture, Ribbit Capital, has invested in fintech companies in the past. The portfolio includes Affirm; Robinhood, a royalty-free start-up; and Credit Karma, a company that offers consumer-friendly tools like free credit checks.