Walmart is using its own fintech firm to provide credit cards after dumping Capital One

Walmart's fintech startup, OnePay, is partnering with Synchrony to launch two new credit card options for Walmart customers this fall, replacing Capital One as the issuer. The move comes after Walmart sued Capital One to exit their partnership early, with OnePay now managing the customer experience through its app. This collaboration signals OnePay's strategy to scale rapidly in financial services by partnering with established players like Synchrony and Klarna, offering debit cards, savings accounts, and a digital wallet in its quest to become a comprehensive financial services provider.

Analysis

Walmart's majority-owned fintech, OnePay, is significantly advancing its financial services footprint by introducing two new credit cards, a general-purpose Mastercard and a Walmart-specific store card, in partnership with Synchrony, slated for a fall launch. This collaboration will see Synchrony manage underwriting and card issuance, while OnePay will oversee the customer experience via its mobile app. This strategic alliance replaces Walmart's former exclusive card issuer, Capital One, a partnership that encompassed 10 million customers and approximately $8.5 billion in loans outstanding as of last year, which Walmart moved to terminate early via a 2023 lawsuit. The selection of Synchrony, and a similar recent decision to partner with Klarna for Buy Now, Pay Later services, signals OnePay's clear strategy to achieve rapid scale in financial services by collaborating with established industry players rather than pursuing standalone development. This initiative is part of OnePay's broader ambition to become a comprehensive financial provider for Americans underserved by traditional banks, complementing its existing offerings of debit cards, high-yield savings accounts, and a digital wallet. The overall market sentiment towards this development is moderately positive, particularly for Walmart (WMT sentiment: 0.6) and Synchrony (SYF sentiment: 0.5), reflecting anticipated benefits, while Capital One (COF sentiment: -0.6) faces the confirmed loss of a major account.

Key Decisions for Investors

• Investors should monitor OnePay's customer acquisition and card utilization rates post-launch to assess the success of Walmart's (WMT) fintech expansion and its impact on customer loyalty and ancillary revenue streams.
• For Synchrony Financial (SYF), this significant partnership offers a notable growth avenue; upcoming financial reports should be scrutinized for integration progress, onboarding costs, and the projected contribution to its loan portfolio and earnings.
• Capital One (COF) investors should consider this event as the formal conclusion of its Walmart partnership, focusing on COF's strategies to mitigate this portfolio loss and its success in securing new growth opportunities.
• The competitive landscape in embedded finance and retail partnerships is intensifying, as highlighted by Klarna's earlier win over Affirm (AFRM) for Walmart's BNPL; investors should assess the differentiation and partnership capabilities of companies in this sector.