Credit Card News

Walmart Suing Capital One Over Co-Branded Credit Card Deal

In 2019, Walmart announced that it had signed a new exclusive agreement with Capital One to issue its cobranded credit cards. This ended a nearly 20-year partnership that the megaretailer had with Synchrony and resulted in the Capital One Walmart Rewards Mastercard and Walmart Rewards Card. However, less than four years later, Walmart is now suing Capital One.

According to a report by the Wall Street Journal, Walmart is looking to terminate its current agreement. The suit, which was filed in the Southern District of New York, alleges that Capital One failed to provide customers with certain services as they were obligated to do. This includes not sending out replacement cards promptly. Additionally, the suit states that the bank saw delays in posting some transactions and payments to cardholder accounts.

In a statement shared by WSJ, a Capital One spokesperson responded to the suit, saying, “These immaterial servicing issues were cured by Capital One pursuant to the terms of the agreement, without harm to customers, the program, or Walmart,” adding that the lawsuit is “an attempt to renegotiate the economic terms of the partnership it agreed to just a few years ago, or end the deal early.” The spokesperson went on to say that the bank would “vigorously protect our contractual rights in court.”

WSJ also reports that Walmart had already approached Capital One about amending some aspects of the current agreement. This includes making adjustments to the loss-sharing agreement in regard to charge-offs. Walmart has also allegedly wanted to bring its FinTech firm ONE Finance into its credit card issuing process. ONE was acquired by Walmart’s Hazel (which it created with venture capital firm Ribbit) in 2022 alongside another startup called Even. Upon the purchase, the name of the company was changed to ONE. As a result, several of the features ONE offered prior to the acquisition have evolved or been discontinued.

While Capital One taking over the Walmart co-branded credit card portfolio may have seemed like a big get at the time, it sounds as though the partnership has become a headache for the bank — although the deal is presumably still lucrative. Incidentally, as WSJ notes, Walmart also previously sued Synchrony, alleging that the bank’s underwriting practices harmed the retailer (the suit was later dropped). Ultimately, it will be interesting to see how this spat shakes out, especially if reports that Walmart wants to bring ONE into the process prove to be true. In any case, a Walmart spokesperson said that the company looks “forward to bringing our customers a new credit card option that provides meaningful benefits and rewards soon.”