Walmart ends Capital One “exclusivity,” but what’s next is unclear.
May 27, 2024 – Capital One and Walmart have ended the partnership that made Capital One the exclusive issuer of Walmart credit cards, the two companies announced in a joint statement on Friday. Walmart did not announce plans for a new card partnership with any other bank.
Capital One will retain the existing Walmart credit card accounts, and current cardholders will see no changes in the short term. Often when a retailer changes credit card issuing partners, the new issuer will buy the existing card portfolio from the previous issuer, but so far that is not the case here.
Not Exclusive, But Maybe Not Breaking Up?
The wording of Friday’s announcement was vague: While it said Capital One is no longer the “exclusive” issuer of Walmart credit cards, it did not say that Capital One will no longer issue any new credit cards in partnership with Walmart. So is Capital One out, or is Walmart bringing on an additional partner that hasn’t yet been announced?
Perhaps strangely, The Walmart Rewards credit cards issued by Capital One continue to be shown on the Walmart website, with new applicants still being encouraged to apply.
Was Walmart Really Unhappy, or Did They Just Want a Bigger Piece of the Pie?
Earlier this year, Walmart sued Capital One to end the partnership, saying Capital One had not lived up to the terms of their partnership agreement. Capital One denied Walmart’s claims, but ultimately a court sided with Walmart, saying that Walmart was within its rights to end the agreement early.
Walmart is the majority owner of the financial technology company One, and there is speculation in the finance industry that Walmart wants to push out Capital One in favor of One. However, One is not a bank itself, and currently issues debit cards through a partnership with Coastal Community Bank.
Whether Coastal Community Bank can handle a credit card portfolio the size of Walmart’s is a legitimate question, and it may be why Walmart is not saying that its relationship with Capital One is ending completely. Walmart might need Capital One while it continues to shift its credit card operations elsewhere.
Author: Adam Jusko