Walmart Pushes BNPL Loans With One

For Walmart, buy now, pay later (BNPL) may offer the means by which the retail giant pushes even further into financial services and toward super app status.

And the low-hanging fruit for BNPL may be found at checkout for groceries and healthcare.

The move, we note, also sets the stage for competition — or perhaps what might be termed a complementation — with Affirm, already a payment option entrenched with Walmart.

As had been widely reported Tuesday (April 23), initially by CNBC, One, the FinTech that is majority owned by Walmart, has begun offering BNPL loans at some locations.

The report noted that the BNPL options — from One and from Affirm — were available for purchases ranging from $100 to as much as a few thousand dollars. The categories range from electronics to jewelry — and notably, not groceries.

Not yet anyway.

An Affirm Read Across?

Affirm shares closed Tuesday’s trading up 2.5%. Walmart shares slipped 1.7%, The read across here seems to be that any initial concerns that Affirm is being displaced entirely are mollified a bit.

Given the relatively high-ticket purchases noted above, it’s worth a dive into the spending categories that have seen an embrace of BNPL for Affirm. At the moment, there is not all that much overlap. Affirm noted back in February that in the year-end quarter, general merchandise was 40% of the volume mix, electronics were only 8% of the mix, and auto equipment trailed at 5%.

Separately, as PYMNTS Intelligence data has shown, roughly a third of consumers living paycheck to paycheck are frequent users of BNPL, and about 41% of households earning up to $100,000 annually have used, or are using, BNPL.

At the same time, Walmart has noted in past earnings reports that it has seen an influx of higher-income shoppers. Separate data here indicates that more than a third of Walmart shoppers earn north of $100,000. It makes sense, then, that the initial One forays would be for the big-ticket items.

Much will depend on the underwriting of the BNPL loans. Affirm underwrites its transactions and noted in its most recent earnings report that 30-day delinquencies were flat quarter over quarter and year over year.

A visit to the One website details that, “Please note that the option to pay over time with One is only available to a limited number of customers at this time through the Walmart checkout process online or in app,” and adds that the loans are underwritten based on the items in a shopper’s cart for items spanning $100 to $3,000. Walmart has some deep pockets to underwrite One’s BNPL efforts. Cash and equivalents at the end of the most recent quarter stood at $9.9 billion.

The strength of its financial position and its reach might give some runway to Walmart moving its BNPL offerings through One to lower-ticket items, such as grocery. PYMNTS Intelligence has noted that Walmart’s share of the grocery spend category now stands at 19% of the food and beverage category.

Grocery sales also account for about 60% of Walmart’s consolidated top line, so this is an area of continued promise for BNPL.

PYMNTS has found that 79% of consumers remain interested in an everyday app,  roughly 70% want to buy retail products through those super app channels, and 70% would buy groceries there.

From electronics to high-end purchases … all the way down to everyday, grocery spend, carved out over time … Walmart’s BNPL efforts may help anchor its super app ambitions. Super apps also have banking in the mix. One boosts the juggernaut’s financial services standing. Karen Webster noted as far back as 2021, the confluence of digital, physical, health care and BNPL all have been converging through a digital front door.

The field of BNPL providers is getting larger…and Walmart may be poised to upend the competitive landscape, at least a bit.