Walmart has entered the buy now, pay later (BNPL) arena through its partnership with the fintech startup, One, expanding its financial technology offerings and setting the stage for potential competition with Affirm, one of the leading providers in the BNPL space. This strategic move by Walmart marks a significant step in its effort to become a more dominant player in the financial services sector, potentially elevating its status to that of a super app.

One, which is majority-owned by Walmart, is rolling out BNPL loans available for purchases between $100 and $3,000, with an APR ranging from 9.99% to 35.99% based on creditworthiness. This initiative has been introduced in select Walmart stores across the United States, although the exact locations have not been disclosed. The decision to venture into BNPL services underscores the growing demand for flexible payment solutions, especially during times of economic hardship such as persistent inflation, high interest rates, and student loan burdens.

The emergence of BNPL as a popular payment method was highlighted over the holiday season, where there was a significant increase in usage during Cyber Monday sales. According to Adobe, BNPL options accounted for $940 million, marking a 42.5% increase year over year, with cart sizes also rising by 11%. This trend points to a larger consumer shift towards seeking flexibility in managing their finances.

While BNPL offers relief and flexibility, financial experts caution consumers about the potential pitfalls, such as the risk of accruing debt if payments are missed, which could lead to dealings with debt collectors. Despite these warnings, the allure of BNPL options persists, particularly for high-ticket items like electronics and jewelry. Walmart's foray into BNPL with One does not currently extend to groceries or healthcare, but it signals potential future expansion into these daily essential categories.

The competition, or possible complementation, with Affirm reveals a nuanced sector where overlap in product categories might not be significant at the moment. Affirm, which covers a diverse range of spending categories, has shown steady performance in its underwriting practices, maintaining stable delinquency rates year over year. Walmart's introduction of One's BNPL services is seen not as a replacement but as an addition to the array of payment options for Walmart shoppers, a significant portion of whom have been identified as living paycheck to paycheck and could benefit from such services.

Walmart's strategic investment in BNPL via One could significantly impact the retail and financial services industry by catering to a broader spectrum of consumer needs. This move aligns with Walmart's ambition to position itself as a super app, integrating banking, digital, and physical retail services, along with healthcare, through a unified digital platform. The expansion of BNPL services, especially into critical segments like grocery, which constitutes a significant portion of Walmart's revenue, might further solidify its market dominance.

This development not only showcases Walmart's response to shifting consumer payment preferences but also indicates a transformative phase in the retail and financial services sectors. The success of Walmart's BNPL offerings through One could challenge existing providers like Affirm and reshape the competitive landscape, providing consumers with more options and flexibility in how they approach their spending.