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Thursday, June 20, 2024

Walmart and Capital One cease their exclusive consumer credit card relationship.

Walmart and Capital One have officially ended their exclusive consumer credit card partnership, which began in 2019. This decision follows a series of disputes and a lawsuit filed by Walmart in 2023, alleging that Capital One failed to meet customer service standards, including delays in payment processing and card replacements. In March 2024, a federal court determined that Walmart might end the agreement early because of these service issues.

Key Points:

  • Continuation for Cardholders: Despite the termination, existing cardholders can use their Capital One Walmart points cards to earn and redeem points. The value of previously accrued rewards remains unchanged. Capital One will maintain ownership and maintenance of the credit card accounts, and cardholders will get further information in the coming months.
  • Legal Disputes: Walmart’s dissatisfaction with Capital One’s service led to a lawsuit in 2023. The retailer accused Capital One of slow transaction updates and delayed card replacements. The court ruled in Walmart’s favor, allowing the early termination of the partnership.
  • Future Plans: Capital One plans to transition eligible Walmart cardholders to its flagship branded rewards products. The bank is also shutting down new applications for the Walmart card. It remains uncertain who Walmart’s new banking partner will be.
  • Financial Impact: The existing Walmart credit card portfolio contains approximately $8.5 billion in loans. Analysts believe the breakup will have a minimal impact on Capital One, as the Walmart portfolio is a small portion of its total loans. Capital One will benefit from retaining all income from the newly converted card customers.
  • Capital One’s Broader Strategy: The termination comes amid Capital One’s proposed acquisition of Discover Financial Services, valued at $35.3 billion. This deal is under scrutiny by the Department of Justice and the Consumer Financial Protection Bureau.

In summary, while the partnership between Walmart and Capital One has ended, the immediate impact on cardholders is minimal, with continued use and rewards accrual. The long-term implications for both companies will unfold as Walmart seeks a new banking partner and Capital One integrates the Walmart cardholders into its broader portfolio.

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