is talking to
Capital One Financial
about taking over its store credit card, according to people familiar with the matter.
The discussions, which are expected to wrap up in coming weeks, could end
nearly 20-year run as the exclusive issuer of Walmart cards.
Synchrony has been Walmart’s exclusive credit-card issuer since 1999 and counts the partnership as one of its five biggest by revenue. Synchrony issues both a private-label card, which can only be used at Walmart’s stores and website, and a co-branded card that is accepted almost everywhere.
This is the first time Walmart launched a formal request for bids from other card issuers, people familiar with the matter said. The retailer met earlier this year with executives from Capital One and
Goldman Sachs Group
which has been exploring its own entry into credit cards, according to people familiar with the matter.
One option that Walmart has looked at is whether to keep its credit card that can only be used at its stores with Synchrony and move the co-branded card to Capital One, people familiar with the discussions said. Walmart’s talks with Capital One were previously reported by Bloomberg News.
Losing Walmart would be a blow to Synchrony, which counts the retail giant among its five largest accounts. Walmart credit-card balances total around $10 billion, according to a person familiar with the matter, accounting for 19% of Synchrony’s retail card balances and 13% of its total balances, which also include retail installment loans and medical loans.
Walmart is being advised by boutique investment bank
& Co., while Kessler Financial Services, a credit-card consultant, is working with Capital One, people familiar with the matter said.
Capital One and Synchrony declined to comment. Walmart wasn’t immediately available for comment.
Walmart and Synchrony have encountered challenges on several fronts of late. Synchrony executives have expressed frustration that Walmart isn’t putting enough marketing muscle behind the cards and wants more in-store promotion, people familiar with the matter said.
Walmart executives believe Synchrony is keeping too much of the cards’ revenue, the people said. The executives aired those concerns in a meeting with Synchrony’s board last year, one person said.
The retailer also wants Synchrony to approve a higher percentage of applicants, the people said. Walmart recently partnered with fintech startup Affirm Inc. to offer installment loans to some shoppers as an alternative to credit cards.
Facing intense competition from
Walmart has been investing in self-checkout and mobile payments, pushing customers toward its own digital wallet, Walmart Pay. It sees Capital One as a more tech-forward partner whose broader banking capabilities could aid Walmart’s digital ambitions, some of the people said.
Synchrony’s shares are down 11% this year amid rising loan losses and myriad challenges facing traditional retailers, including declining health of brick-and-mortar stores. Synchrony recently lost Toys “R” Us, a high-profile store partner, to bankruptcy.
There have been other challenging spots in Walmart’s relationship with Synchrony. Less than 5% of Walmart sales are made on Walmart credit cards, a person familiar with the matter said. That is well below the 40% of retail sales that store cards typically account for, according to analysts.
Separately, Walmart has been talking to banks about potentially launching a separate credit card for consumers who shop at its e-commerce subsidiary, Jet.com, people familiar with the matter said.