Next for Wal-Mart Shoppers: Installment Loans?
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal. Welcome to Your Money Matters. I'm Charlie Turner in New York.
What deal is being reported between Affirm and Walmart?
The Wall Street Journal says upstart financing firm Affirm is in talks to offer installment loans to some Walmart shoppers. This move would provide stiff competition for Synchrony Financial, the exclusive issuer of U.S. credit cards for the world's largest retailer. Let's talk about this possible deal with Wall Street Journal credit card reporter Anna Maria Andriotis. And first, we should stress that the tour and talks in a deal may or may not be finalized by the time our listeners hear this. Anna Maria, this would be a pilot program that would start as soon as this fall, right?
Correct. So the two companies are in discussion and are looking basically at potentially putting together this deal where a firm would be offering a financing option to some Walmart customers. This would be both online and in some store locations.
How would the Affirm pilot program be rolled out in stores and online?
And as you said, could come to fruition as soon as this fall.
And are firms' loans would be focused on larger purchases like tires at Walmart stores?
Right. So what we're talking about for the most part would be purchases of over $200. And one of the things that would... result, if this deal does actually materialize, is that you'd have some shoppers that would be looking at choosing between two financing options, essentially, from Walmart, synchrony credit cards and a firm installment loan.
Which Walmart purchases would qualify for Affirm installment loans?
These loans would be geared toward people with limited credit histories. Isn't that the idea?
So basically, that is a big group of people that these loans would be targeting, people who have limited credit histories. And as a result... have low credit scores, but it's not all of the people that they'd be targeting. So we're talking about a mix of people where it could be people with full credit reports, with good credit standings, and those who have a very thin record of previously managing debt. And so why this is important is because essentially what's going on here is that Affirm and Walmart have been in discussions for several years.
Who would Affirm’s loans target and how does that differ from Synchrony’s customers?
This dates back to 2014 when those discussions began. And what my sources are telling me is that basically what's been going on is that Walmart is interested in Affirm's offer essentially of more products. loan approvals, more approvals, being able to approve more people that shop at Walmart for financing. That's important because in general with retailers, the more people who get approved for in-store financing, whether it's credit cards, installment loans, typically results in more sales, more loyalty, those people shopping at that store more.
So it's a good way for Walmart and other retailers to expand their customer bases.
Correct. And so one pool of people that could be impacted here would be people with limited credit reports. These people tend to have low credit scores and might not be getting approved by Synchrony, but could be getting approved by Affirm.
I'm speaking with Anna Maria Andriotis of The Wall Street Journal, and you're listening to Your Money Matters. Thanks for listening, everyone. So it looks like it presents Walmart shoppers, Anna Maria, with a choice of, you know, making a purchase with a synchrony credit card or getting an affirm installment loan whose payments could be spread out over a longer period of time.
Right. And also, the reason why this is important is because if you just look at the history of Synchrony and Walmart, Synchrony is the largest U.S. store card issuer. You're talking about two giants here in the retail space and in the credit card store issuance space. And you have this sort of upstart lender getting into the mix and potentially causing some disruption there. Meaning that you're moving from a situation where Synchrony has been the only provider of financing, Walmart financing to its shoppers for many years to shoppers being able, some shoppers being able to choose between two lenders, Synchrony and Affirm.
Right. And Affirm would not charge a late fee for late payments.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:02–0:11
2
What deal is being reported between Affirm and Walmart?
0:11–1:06
3
How would the Affirm pilot program be rolled out in stores and online?
1:06–1:45
4
Which Walmart purchases would qualify for Affirm installment loans?
1:45–2:28
5
Who would Affirm’s loans target and how does that differ from Synchrony’s customers?
2:28–4:52
6
How do Affirm’s fees and APRs compare with Synchrony’s Walmart credit card?
4:52–6:00
7
What risks and industry implications could this Affirm–Walmart partnership create?
6:00–7:42
Speakers
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