Walmart, the American retail giant based in Bentonville, Arkansas, has ended its partnership with the Capital One Financial Corporation, an American bank holding company specializing in credit cards, auto loans, banking, and savings accounts, headquartered in McLean, Virginia.
The two companies partnered in 2019 after Walmart ended it previous financial partnership with Synchrony Financial, which, like Capital One provided credit cards to its customers. After this, Capital One became the exclusive issuer of Walmart’s consumer credit cards and has been since.
The Walmart lawsuit
The partnership did not last long and a lawsuit, which began in April 2023 was filed by Walmart. In the retail giant, accused Capital One of various things like taking too long to process transactions to cardholders’ accounts, mail replacement cards to consumers who had lost them or had them stolen in late 2022 and early 2023 and failing to meet some of Walmart’s service standards (this allegation was, according to Walmart, admitted by Capital One).
After these issues arose, Walmart wanted to sever the partnership before it had been contracted to end naturally and thus had to file the suit. Capital One did not dispute the issues it had been having with customers but nevertheless declared that these were not enough to break the contract early and that the retail giant was just using them as an excuse to “end the deal early.”
The cards in question were co-branded and offered customers rewards like cash back on in-store purchases and online orders set for pickup or delivery. The deal between the two companies was supposed to be in good standing until the end of 2026, so still two more years that the retail giant was not honoring according to the banking institution.
However, a federal judge ruled in favor of Walmart in March, giving the company permission to formally pull out of the deal and sever ties with Capital One, recognizing that the problems raised by the retailer were enough to declare the contract unfulfilled. This has left many customers wondering about the future of their cards and accounts, as the conditions they were opened under were somewhat specific to the partnership and thus could be made void after its dissolution.
The result for customers
Capital One has attempted to reassure them in a statement, “The parties determined that the best path forward for our customers is to end the current partnership and convert existing eligible Walmart Card customers to one of Capital One’s flagship branded rewards products.” This process will be done automatically by the financial institution and will not require any action on the part of consumers. The cards will continue to accrue rewards and be serviced without any changes, and, should this not be the case in the future, Capital One will contact them “in advance of any upcoming changes to customer account features or functionality. Customers can continue to shop with their current products and make payments in the same manner as they always have.”
These statements by the company will have been comforting for the affected clients, as Capital One has stated that there are currently approximately $8.5 billion in loans in the existing Walmart credit card portfolio.
The change was announced in a joint statement to give consumers all the information as well as time to adjust to the new situation, but the bank had also made conflicting statements disagreeing with the federal ruling and stating their intent of evaluating its right to appeal.
As of the publication of this article, no moves have been made to appeal the decision.
Given the problems with this partnership, Walmart has not announced any new financial partnerships to renew the service with a different brand or financial institution.
