Walmart Plans to Launch New Buy Now, Pay Later Service

The move is driven by consumers feeling the impacts of inflation.

December 13, 2022

ALEXANDRIA, Va.—A fintech company backed by Walmart plans to launch a buy now, pay later payment service for Walmart customers to use in store and online, reports CNBC. The company, called One, is majority-owned by Walmart, and the service could available as soon as next year.

The idea for the service was motivated by the challenging economic environment and the impact of inflation on consumers, according to a CNBC-cited source. Walmart CEO Doug McMillon recently told the news outlet that American consumers are still “stressed” by inflation.

“We’ve got some customers who are more budget conscious that have been under inflation pressure now for months,” he told CNBC. “That sustained pressure in some categories, I think, is something customers are having to deal with as we approach Christmas.”

Walmart currently offers buy now, pay later options with Affirm.

The U.S. Labor Department today released better-than-expected data showing that consumer prices rose 7.1% in November, compared with a year ago, which was down from 7.7% in October. The core Consumer Price Index increased 6% last month, compared with a 6.3% rise in October.

Shoppers are being more selective, choosing staples over discretionary purchases, such as electronics. Walmart is seeing company growth from people choosing the retailer to save money, including wealthier consumers. About 75% of its market share gains in grocery came from shoppers with an annual household income of more than $100,000 in the past two quarters, reports CNBC.

One was started by Walmart and Ribbit Capital last year, and although the fintech company is independent, Walmart has the largest investment in the company. Since its inception, One has acquired One and Even, two other fintech startups. The company adopted the name One and aims to be an all-in-one app where consumers can manage their money.

A recent New York Times article found that Americans are using buy now, pay later options to pay for their weekly food bill, as well as smaller purchases such as a coffee or sandwich.

One BNPL user told the Times she doesn’t hesitate to use the service for her everyday food purchases.

“If I wanted to pick up a coffee on the way home from somewhere and I didn’t have any money in my coffee or eat-out budget, I would push it to next month’s budget,” she said.

Buy now, pay later companies tout the convenience of their services and how they help consumers through difficult financial times. Shoppers can apply for a buy now, pay later service as they’re checking out and can be approved in minutes. Most companies don’t charge interest, and borrowers don’t have to have their credit checked. There is usually a processing fee involved, but typically, the merchant pays that fee.

In 2020, consumers made $15.3 billion in buy now, pay later transactions, and last year, that amount rose to $45.9 billion. Food was 6% of that amount in 2021, and in the past year, buy now, pay later company Zip says it has seen 95% growth in U.S. grocery purchases and 64% in restaurant transactions. Zilch says groceries and dining out are 38% of its transactions.

Read how convenience retailers are managing inflation in “What’s Your Inflation Strategy?” and how it affects c-store shoppers in “The Pinch of Inflation” in NACS Magazine.