Walmart said Monday that it is creating a fintech start-up with Ribbit Capital, one of the investment firms behind Robinhood, to create unique and affordable financial products for Walmart employees and customers.
The big-box retailer did not share the name of the new company or say when its digital financial services will be available.
The fintech startup will be majority-owned by Walmart and its board will include several company executives, including its Chief Financial Officer Brett Biggs and Walmart U.S. CEO John Furner. It said it will also name independent industry experts to the board and may acquire or partner with other fintech companies.
“For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs,” Furner said in a news release. “And they’ve made it clear they want more from us in the financial services arena.”
With more than 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 a financial adviser.
Six percent of adults don’t have a checking, savings or money market account, according to the Federal Reserve. About 16 percent are “underbanked,” meaning they have a bank account but also use alternative financial service products, like a money order. Those Americans are more likely to turn to short-term solutions, such as a pawn shop or a payday loan, which can lead to additional charges or high interest fees.
Walmart already offers some financial services for customers. For example, it has Walmart MoneyCard, a prepaid debit card that customers can load with money and use for purchases. The card has some features that encourage money management or help people who may have a challenged credit history, such as no overdraft fees, no monthly fee and no minimum balance requirement.
The retailer also offers alternative payment plans for customers on a tight budget, such as layaway and Klarna, an online financial services option that allows shoppers to buy an item immediately and pay in installments.
Walmart’s co-owner of the new company, Ribbit Capital, has a history of investing in fintech companies. Its portfolio includes Robinhood, a fee-free investing startup; Credit Karma, a company that offers consumer-friendly tools like free credit score checks; and Affirm, a financial lender that offers customers alternative payment options like buying now and paying later.