Walmart’s Answer To Facebook’s Libra: The Walmart Coin


There are many ways to introduce an idea to the world.

There is something to be said for going big — fireworks, a parade and a vast array of headlines.  This, in short, seems to be the route Facebook decided to take with Libra — big announcement, big white paper,  big partners and, most importantly — big, big plans. In short, Facebook hopes to create a new set of payments rails with the Libra cryptocurrency — with the aiding and backing of a veritable who’s who of payments and luminaries — mainly as a tool to reach the approximately 1.7 billion unbanked consumers on Earth.

No one will ever accuse the project of lacking ambition.

But as most attempts at making a big splash entail — the big Libra announcement drew a lot of reactions, not all or even most, positive. Globally, regulators of all kinds have turned various shades of green at the prospect, and in two-days of testifying before the House and Senate, the U.S. Congress made its position on the subject at present very clear: We don’t trust Facebook to run this kind of a project.

“It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next? Let’s run our own bank and our own for-profit version of the Federal Reserve for the world,” Ohio Senator Sherrod Brown noted in a set of remarks that more or less sums up most of what the head of the Libra project for Facebook, David Marcus, heard in two days on Capitol Hill.

Given the fact that going big does have that attendant risk of setting too much of the world aflame prematurely with one’s idea in the wrong way —  there is also the time honored slow-and-steady method. Instead of jumping in with both feet hoping to make as big a splash as possible, the other method is more associated with dipping a toe in and checking the water’s temperature first.

And that, it seems, is the approach that Walmart is taking to cryptocurrency — as last week the world’s largest retailer by sales quietly filed an application with the U.S. Patent and Trademark Office for a blockchain-backed digital currency all its own. Walmart’s proposal is early — and as is always the case with patents filings, may represent a potential strategy idea that may never go anywhere at all. But even in its early days, one can see that in some ways, in both design and intent, that the unnamed “Walmart Coin” bears a resemblance to what Facebook is thinking about with Libra.

As well as the ways in which it is a creation, and a strategic move, unto itself.

What “Walmart Coin” Has in Common With Libra

Like Facebook — and eventually the Libra Association — Walmart is not at all interested in getting itself involved in the wild world of cryptocurrency speculation. The “Walmart Coin” like Libra will be a stablecoin with its value pegged to that of the U.S. dollar.

The coin, also like Libra, seems at least in part to be designed as method of financial inclusion for consumers who are sidelined from the banking system, or who have opted out by choice.

“The cost of having little money is high because of frequent short-term borrowing, accumulated interest on short-term borrowing that becomes long-term, high bank fees proportional to wealth, high credit card fees, and high payday loan interests, all of which can take money away that could be available — and would be used — to buy necessities,” the application notes.

It goes on to point to the difficulties of cash-flow management for customers living week-to-week on paychecks, and that any fees can tip a financial situation over into ruin for those living on the margins.

“Using a digital currency, low-income households that find banking expensive, may have an alternative way to handle wealth at an institution that can supply the majority of their day-to-day financial and product needs,” Walmart noted in its patent application.

And, it is clear from the application — with all the talk of rewards and loyalty offerings, personalization applications and interest generating accounts — that the possible future Walmart Coin is, in some sense, possibly an ecosystem play like Libra, and (by extension) the Calibra wallet Facebook intends to have riding on those rails someday.

Walmart, like Facebook, is hoping to give customers more of a reason to come into its front door — and then do and buy more, powered by a digital currency, while they are there.

But in some ways, the Walmart concept is very different from the Libra pitch — and in ways that mean it will likely face less of an uphill battle, at least when it comes to midwifing it into reality in the current regulatory environment.

The Unique Side Of “Walmart Coin”

The main difference between the two projects, and what will mean this likely won’t attract the same levels of regulatory ire should it come to pass as Libra has, is that Walmart is in essence building a closed loop blockchain-based system, meant for use only within Walmart.

It is also very much not a collaboration play — particularly with the U.S. Card Networks, the two biggest of which (Visa and Mastercard) have already pledged to be part of Libra. As the patent application clearly notes, this coin could be another attempt by Walmart to offer consumers a digital payment method all their own — and free.

It’s fair to say that Walmart has never been much of an interchange fee fan.

“In some embodiments, digital currency may remove credit and debit cards without requiring cash by offering a blockchain-protected digital currency. In some embodiments, the digital currency may act as a pre-approved biometric (e.g., fingerprint or eye pattern) credit. A person is the ‘credit card’ to their own digital value bank,” the application notes.

The application also outlined ways in which a blockchain-based system using crypto as a new form of fiat currency could allow more personalized rewards and offers for regular consumers — by offering a full and easy-to-access log of every item they’ve ever purchased. It also noted the digital currency could be used to create “micro markets outside the traditional Walmart environment.”

“Micro market may refer to an unattended retail environment where consumers can purchase products from open shelves, coolers or freezers and use a self-checkout kiosk to pay for their products,” said the application noting that customers without traditional bank accounts could potentially use the coin to  create a microbank with the retailer — a microbank that itself could “accrue interest while their money is there.“

Interest accrual is another feature unique to the concept as Walmart is outlining it in the patent filing.  That would not be possible with Libra, as interest earned on the Libra reserve fund would go to the members of the Libra Association.

But perhaps the biggest difference is that we know Libra is happening — or at least that Facebook is ready to go pretty close to the mat to make it happen — whereas Walmart says it is not pursuing any crypto currency project of this sort, patent application or not. Kory Lundberg, a spokesman for Walmart, wrote in an email to Bloomberg that “we don’t have any plans at this time.”

Still, this is far from Walmart’s first foray into blockchain — it already uses the tech to track products and pharmaceutical products.

“Walmart is not chasing blockchain technology because it’s this new shiny coin,” Frank Yiannas, Walmart’s vice president of food safety told Karen Webster in an interview “but to improve the food system.”

Walmart may not have any official plans as of yet, but “not at this time” can become “this time” surprisingly fast.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.