The cars pass a Walmart store in Washington, DC, on August 18, 2020.
Nicholas Kamm | AFP | Getty Images
Walmart said Monday it was creating a fintech start-up with Ribbit Capital, one of the venture capital firms behind Robinhood.
The retailer did not share the name of the new company and did not say when its services will be available. He said it will develop unique and affordable financial products for Walmart employees and customers.
Shares rose more than 2% on news during trading after 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 directors of the company, including chief financial officer Brett Biggs and Walmart CEO John Furner. He said he will also appoint independent industry experts to the board and may acquire or partner with other fintech companies.
“For years, millions of customers have trusted Walmart to not only save money when shopping with us, but also help them manage their financial needs,” Furner said in a news release. “And they have made it clear that they want more from us in the financial services arena.”
With over 4,700 stores across the country, Walmart interacts with millions of customers each year – including some who don’t have a relationship with a bank or financial advisor.
Six percent of adults do not have a checking account, savings or money market, according to the Federal Reserve. About 16% are “subbankers”, which means they have a bank account, but also use alternative financial services products, such as a payment order. Those Americans are more likely to resort to short-term solutions, such as a pawn shop or a payday loan, which can lead to additional fees or high interest fees.
Walmart already offers some financial services for customers. For example, he has a Walmart MoneyCard, a prepaid debit card that customers can charge with money and use for shopping. The card has several features that encourage money management or help people who may have a disputed credit history, such as no overdraft fees, no monthly fees and no minimum balance requirement.
The retailer also offers alternative payment plans for low-budget customers, such as Layaway and Klarna, an online financial services option that allows shoppers to buy an item immediately and pay in installments.
The new company’s Walmart co-owner, Ribbit Capital, has a history of investing in fintech companies. His portfolio includes Robinhood, a start-up with no investment; Credit Karma, a company that offers consumer-friendly tools, such as free credit score checks; and Affirm, a financial lender that offers customers alternative payment options such as buy now and pay later.