The news: Walmart’s majority-owned fintech, One, will take over the retailer’s dual co-brand and private label portfolio when it relaunches next year, per Bloomberg. It is still unknown who the banking partner for the card program will be. For its installment loan offering, One partners with Coastal Community Bank.

Likely in part because of this takeover, One also secured a funding round of $300 million, led by Walmart and investment firm Ribbit Capital. One’s valuation is now at $2.5 billion.

How we got here: Walmart and Capital One ended their consumer card partnership agreement in May after the retailer sued the issuer. Eligible customers were transferred to a Capital One QuickSilver Mastercard.

Why this matters: Walmart’s card program was one of the largest co-brand portfolios. Rebuilding it could be a massive revenue opportunity for One. The portfolio had approximately $8.5 billion in existing loans, per a government filing.

And by bringing the card program more in-house, Walmart will have more control over it and can likely negotiate better terms with its new issuing partner.

The bigger picture: One and Walmart have expansive financial services ambitions.

• One has been ramping up its offerings: In April, it launched its buy now, pay later (BNPL) solution for big-ticket items at the retailer.
• It also offers banking services like checking and savings accounts, rewards for users who shop at Walmart, and early wage access for Walmart’s employees.
• Across all of its products, One boasts 3 million monthly active users.

Our take: Walmart is becoming a major payments player and introducing a new competitive threat to banks and other fintechs. And being able to market products to its massive customer base gives Walmart a key competitive advantage over more traditional financial institutions.

Keeping these offerings in-house also ensures Walmart gets more of the payments revenues they generate and helps it avoid paying as many costly fees to other payment providers. Along similar lines, Walmart will roll out an enhanced pay-by-bank offering in 2025 through a partnership with Fiserv to help avoid costly swipe fees.

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