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Walmart-backed fintech startup plans to launch its own buy now, pay later loans now

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A walmart-backed startup wants to compete with companies that buy now, pay later.

The company, dubbed One, is preparing to launch its own version of the payment service next year, according to a source familiar with the matter.

One, which Walmart owns a majority stake, wants to launch a service that customers can use at Walmart’s website and stores, as well as at other retailers, the source said. The effort was driven in part by a more challenging economic environment and consumers feeling pinched by inflation.

Buy shares now, pay later To confirm fell on Friday. Walmart declined to comment.

One is breaking into the growing payment services category as monthly retail sales continue to rise, but some Americans are showing signs of stress from inflation pushing up the prices of food, housing and more. Those stretched wallets could fuel consumers’ interest in paying for purchases in other ways. Buy now, pay later allows customers to gradually pay off a purchase with fixed monthly payments, along with interest.

Retail executives, including Walmart CEO Doug McMillon, have spoken of even wealthier consumers feeling pinched by inflation. About 75% of the grocery retailer’s market share gains come from households that earned more than $100,000 in the past two quarters.

In an interview with UKTN this week, McMillon said customers feel stressed.

“We have some customers who are more price conscious and have been under inflationary pressure for months now,” he told UKTN’s “Squawk Box.” “That continued pressure in some categories, I think, is something that customers are dealing with as we approach Christmas.”

News of the Walmart-backed startup’s interest in buying now, pay later was first reported by The Information.

Walmart, the nation’s largest private employer and largest grocer, has long offered financial services in many of its stores. It has a cash center where customers can go for banking-related services, such as printing checks, sending or receiving money, or recharging prepaid debit cards. Many of those services target lower-income families who have no relationship with a traditional bank or don’t have the credit history to qualify for credit cards.

Last year, Walmart took it a step further by founding and backing a fintech startup with Ribbit Capital, one of the investment firms behind Robinhood. The fintech startup is independent, but Walmart holds the main interest. The board also includes several top executives, including Walmart US CEO John Furner and chief financial officer John David Rainey. Rainey, Walmart’s new CFO, recently joined the board and is the former CFO of PayPal.

Since Walmart founded and supported the startup in early 2021, it has grown in size. It acquired two other fintech startups, One and Even, early this year for an undisclosed sum. Named One, it aims to be an all-in-one app where consumers can manage their money.

One is led by Omer Ismail, who ran Goldman Sachs consumer banking. It also features some other Goldman veterans.

Buy now, pay later has become a busier space, with companies like Affirm, PayPalKlarna and AfterPay all offer their own versions. Apple also announced plans to launch its own Buy Now, Pay Later option, Apple Pay Later.

Walmart already offers customers the option to buy now, pay later through Affirm. Prior to last holiday season, it ended its layaway program and replaced it with buy now, pay later financing.