Walmart may ditch Affirm partnership to launch BNPL product via fintech venture

The news: Walmart reportedly plans to offer buy now, pay later (BNPL) through its majority-owned fintech venture, ONE, people familiar with the matter told The Information.

Zooming out: The BNPL product will join Walmart’s other payments products, like Walmart Pay—the retailer’s proprietary mobile wallet.

It’s not the company’s first venture into BNPL, either:

• Walmart already offers BNPL to select customers in Canada through a partnership with Duo Bank of Canada.
• It also lets customers check out using BNPL through a partnership with Affirm.

It’s unclear how the new BNPL product from ONE will affect either of these.

The opportunity: Walmart can grab a slice of the popular US BNPL market. We forecast total payment value will grow 25.5% to hit $94.87 billion next year. A BNPL product it has majority ownership of means it can keep more of the income from transactions rather than sharing revenues with providers like Affirm.

ONE’s installment plan can encourage spending at Walmart from customers who want more payment flexibility. It might also help attract new customers who were curious about BNPL but didn’t trust unfamiliar fintechs and wanted the backing of a more trusted brand like Walmart.

What’s the catch? Given that Walmart customers can already use BNPL for payments through Affirm, it’s difficult to see what added value they’d get—or why they’d want to make the switch.

Walmart would also have to contend with the stronger oversight likely to arrive in the US, which could threaten BNPL growth. It will expose itself to complications tied to missed payments and concerns that BNPL can be exploitative—particularly for younger shoppers, who are expected to make up 26.3% of US BNPL users next year, per our forecast. This group might be more likely to miss payments and not be aware of the financial risks associated with BNPL.

Keep reading: Check out our Power of Walmart report to find out the five-year outlook for the retailer.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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