Korva is a scroll of the internet’s best ideas.
Testing every financial product at Walmart
The store test
It began at a small dinner in San Francisco in 2019, organized by Sarah Friar, who sits on Walmart's board. Doug McMillon, then Walmart's CEO, invited Micky Malka to visit him in Bentonville. Afterward Malka's team went to a couple of Walmart stores and tried every financial product they could buy: remittances, prepaid cards, bill payments. The products came from vendors and partners, and the bugs were everywhere.
Meeting Walmart's leaders
In January, just before COVID, Malka wrote to McMillon and was invited in. McMillon introduced him to John Furner, now Walmart's CEO, who has been at the company almost 30 years, as McMillon had, both since they were 17. Financial services was not Walmart's priority number one, two, or three, and for Ribbit it was.
Building OnePay
Walmart did something it had never done and created a joint venture co-owned with Ribbit. They built a new team and brand, bought two companies for the infrastructure, and put Omar Ismail in charge. The result is OnePay. It is the only way to pay with a phone at Walmart, and the debit card, credit card, installment loans, and Klarna loans all run through it.
Why had Walmart long wanted financial services?
Retailers pay card networks and banks a fee, called interchange, on most card purchases, which is a major cost for a business with thin margins. Walmart also serves many shoppers who rely on cash-based services such as money orders and bill pay, which carry fees of their own. In 2005 Walmart applied for an industrial bank charter in Utah, then withdrew the application in 2007 after opposition from banking groups.
Why build a separate company with a partner?
A standalone company can give its team ownership stakes, which a retail parent's pay structure usually cannot. It can also hire from the technology and banking industries on terms those people expect, and move on its own schedule. The partner contributes capital and know-how, and both sides share profits according to their stakes. Corporate joint ventures of this kind are common when a large company wants to enter a field far from its core business.
How do buy-now-pay-later loans work?
Buy now, pay later loans split a purchase into a short series of payments, often with no interest charged to the shopper. The lender earns mainly from a fee paid by the merchant on each sale, which is typically higher than a standard card fee. Klarna, one of the best-known providers, was founded in Stockholm in 2005.
More from David Senra
