Walmart has sued it’s co-branded credit card partner Capital One to terminate its partnership. Walmart is alleging that Capital One didn’t meet certain requirements of the partnership including:
- Not replacing lost cards promptly
- Not posting & settling transactions promptly
Walmart had previously expressed a desire to renegotiate some of the terms of the contract, including the loss sharing agreement. Walmart also wants it’s fintech arm (ONE Finance) of the business to be involved in the issuing of the cards. The Capital One/Walmart card was first launched on September 24, 2019 and the contract is due to run until at least 2026 with provisions for the contract to be extended.
Walmart previously sued Synchrony (who issued the Walmart card before Capital One) claiming that it was financially harmed due to Synchrony’s underwriting standards.
I’m still baffled as to why such giants as Walmart (or even Amazon) don’t come up with their own bank, say Walmart bank (they can name it differently obviously). It doesn’t have to be a giant like Chase, but enough to handle their banking. Then they can not only issue their own cards, but also save a ton in credit card fees.
Someone please enlighten me
Sears and Discover.
Walmart started down that road in 2005, then the 07-08 recession hit, along with the commensurate new regulations and they tabled the bank setup. Now that they acquired One, they appear to be back on that track.
That also baffles me but given that Apple, Google, Walmart, Amazon and many others do not do it and always wind up partnering with established banks – makes it pretty clear it’s not as easy as it seems to you and me and probably close to impossible.
Why? I don’t know. But that track record can’t mean anything else.
In addition to regulatory burdenns, operating a bank requires massive amounts of reserves that need to be set aside for non-operating expenses and losses. That’s capital that Walmart can’t use for its own operations and losses it’ll need to offset with money from elsewhere.
There are so many other reasons that you should probably try googling something. Or leave your email address and I’ll message you personally.
If you didn’t notice they don’t like operating in heavily regulated sectors and have a pretty good unbanked banking via Money centers. Its easy to charge $15 to send $200 via Walmart to Walmart transfers which is almost a bank but legally its not. Don’t forget to checkout all the guns next to bicycles and right after kids toys next time you visit a supercenter.
There’s more rules for banks than there are for retailers, so WalMart has yet to really get a true banking charter. They made some attempts at a Utah chartered industrial bank, pre GFC.
Firms that start financial empires on the side e.g. GE/GECapital, GM/GMAC, Ford/AFS find that it can cause an insane amount of mischief since top management typically has a background in the main operating business, rather than the specialty finance sector.
Other issuers let you multiple of the same card but capitalone Max two global for any of it’s cards.
Seems to me like flimsy reasons to sue.
Cap1 about to find out that Walmart does what they want when they want.
yeah seems like they might be looking for any reason to justify getting out of the contract.
Walmart probably is not gonna have much luck finding an issuer who wants the ONE fintech to be involved in issuing the cards.
Walmart should also sue their strawberry and tomato providers, most of the time both are almost rotten.
Disagree.
Walmart life hack: almost rotten fruit is amazing for smoothies, juices, jams, and pastries.
Walmart life hack: Don’t shop at Walmart.
their great value canned tomato is amazing tho
I wonder if Walmart wants to partner with Amex since they have that relationship already with the Walmart+ Benefit.
I wonder if you’re aware that doing so would compete directly with benefits already on Amex’s own cards.
I am not aware, why can’t they have a co-branded card like Amazon?
I don’t think that’s a problem. Though AMEX platinum has marriot gold benifit, they still issue marriot cards right?
Marriot gold benifit on Plat also has a $695 barrier to entry, so great example.
I’m sure Walmart customers would be hapy to pay that much for Walmart+.
Good lets see a 5% walmart card that works with vgc
Why stop there? You might as well wish for the moon.
I wish for a 10% card that gives 20% back the first year on anything considered MS.
Plus the card also includes complimentary Diamond/Ambassador Elite/Global Services status.
Sincerely, Amen
🚀🚀🚀
Besides these:
Not replacing lost cards promptly
Not posting & settling transactions promptly
Maybe also:
Not approving enough Walmart customers for the card
A signup bonus better than a coke?
Best I can do is a watermelon
Not a Coke…a two liter of Sam’s Choice cola was the SUB! 🤮
Walmart previously sued Synchrony (who issued the Walmart card before Capital One) claiming that it was financially harmed due to Synchrony’s underwriting standards.
Walmart s a joke. Being a customer for years, Walmart either canceled my order or delivered the wrong item(s). Walmart never found its issue but criticized customers.
Google “Walmart drops $800M lawsuit against Synchrony Financial” in 2019 to see the future of this year’s lawsuit.
Spoiler: it’ll happen again with whichever bank replaces Capital One as card issuer. Walmart loves to burn bridges like this.
Tbh since they are in the process of burning another partner another big issuer make take notice and NOT want to work with Walmart since they’ll see what’ll be in store for them.
Why does Synchrony still issue the Sam’s Club credit cards? 🤔
Because Walmart dropped their lawsuit against Synchrony in 2019.
Not replacing cards promptly? Not posting transactions promptly? Capital One does these mundane tasks exactly the same as other large banks, and I’ve never seen anyone complaining about such things nor noticed issues myself. Their rewards/points also post extremely fast, you don’t even have to wait for the statement to close.
Seems like Walmart wants to force their way out of an unfavorable business arrangement and are grasping at straws in order to establish cause to sue. I doubt Capital One did anything wrong as they are a competent bank (technically speaking, unlike Synchrony where people complain about the experience) and Wal-Mart is just unhappy with the financial results of their agreement to the point where they might as well try to sue their way out of it. They wanted a 5% card from a major bank to compete with Chase Amazon and didn’t realize what that really costs, or just wanted to use someone until their fintech arm was ready to take over.
If the split is approved, I wonder who will get to keep the accounts. Obviously Walmart will want to steal them and bring them in-house, while Capital One will want to convert them to Quicksilver or something.
The joke with the fintech arm is that ONE currently doesn’t offer a credit product of any kind at the moment so I’m not sure how they wanted ONE to be involved ( underwriting? , Issuing a card with “Coastal Community Bank” on it instead of their partner?)
Bring them in-house? There’s no way Walmart is going to hold onto a receivables portfolio that’s bleeding it dry. The fintech aspect seems to have more to do with UX than with underwriting.
Like with Synchrony and Capital, Walmart will just sucker another bank into taking on the entire portfolio at a loss and it’ll become someone else’s problem until Walmart decides to sue again in a few years.
What you are witnessing is Walmart churning banks, my friend.
Didn’t realize the fintech aspect was mostly UX, that makes sense. Since this is a 2019 deal, maybe COVID and inflation changed the financials of the deal in a way that Wal-Mart wasn’t prepared for. Apparently Wal-Mart dropped the Synchrony lawsuit though, and they likely don’t have a case against Capital One either, seems like they are trying to churn banks but really just blundering around.
As someone who has used One the UX they use isn’t that great. Then again, this is Walmart we are talking about who thinks Walmart Pay is better then contactless payments.
And who tries their best to get your cell phone number by popping up a box on their self checkouts asking how you want your receipt: by text, print, or text & print. No thanks Walmart, just print the damn thing.
QuicksilverOne is more the level of most Walmart customers!