The super app opportunity includes integrating Walmart’s: 1) Shopify marketplace 2) Connect ad platform 3) health centers 4) existing investments in eCommerce, logistics, supply chain, and inventory management and 5) other product and services not currently affiliated with Walmart. “Walmart’s super app opportunity is a lot bigger than just integrating and digitizing its financial services business or deploying its self-service advertising platform for Walmart partners to manage digital ad campaigns.” As I wrote in an article titled Walmart’s Fintech Ambition: A Super App, Not The ‘Bank Of Walmart’ in March 2021: What’s Walmart’s Play? The Fintech Snark Tank ViewĬitigroup got it right on one call: Walmart wants to be a super app. Although Walmart’s overdraft fee of $15 is half of what most banks charge, with the current political pressure on overdraft fees, it’s hard to see how Walmart would want to attract the political attention that $800 million in overdraft fees would bring.In addition, the $3 per reload on the Money Card would go away with the conversion of the product from a prepaid card to a checking account. Walmart is making it easier for Money Card customers to reduce their monthly fee by lowering the amount of the direct deposit required to waive the fee.But the increase would have to be significant in order to generate $800 million in additional interchange fees. One banker I spoke to believes that Money Card customers will transact more frequently with the card once it becomes a full-fledged debit card versus being a prepaid card because merchants make it harder to take prepaid cards. ![]() Converting customers from the fintech startups will be difficult, but not impossible. Challenger banks like Chime, Varo, and Dave are growing their market share of low- to middle-income consumers-Walmart’s target market.Will converting Money Card to a checking account help Walmart increase revenue by $800 million? If it did, it would have to come from some combination of four sources: 1) number of customers 2) transaction volume 3) monthly fees and 4) overdraft fees.Ĭonverting Money Card to a checking account isn’t going to produce $800 million in revenue growth for Walmart because: Where Will Money Card’s Growth Come From? Citigroup’s estimate that Walmart could generate $3 billion in financial services revenue represents a 36% increase-or $800 million over the current level of revenue. That would put the estimate of Walmart’s financial services revenue at $2.2 billion. ![]() So let’s say that financial services comprised 0.6% of Walmart’s net sales last year. Statista reported that the “other” category of Walmart’s $369.9 billion of net sales in 2021 was also 1%-but with gas consumption down last year, it’s likely that financial services accounted for a greater portion of the sales than in previous years. Assuming financial services and related products comprised 0.5% of sales, they generated $1.6 billion in revenue that year.” “In fiscal 2018, fuel and financial services and related products generated less than 1% of Walmart U.S.’s $318.5 billion in net sales. It’s hard to pin down how much revenue Walmart’s financial services unit generates for the company, as the company doesn’t report the breakout in its financial reports.Ī July 2018 article in CStoreDesicions claimed: How Much Does Walmart Make From Financial Services? The rest of the analysis we can take up with Citigroup. ![]() The last sentence in the paragraph doesn’t make grammatical sense, but you’ll have to take that up with Barron’s.
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