“The Online Lenders Alliance has long held the position that increased competition in the financial services marketplace benefits consumers by spurring innovation, increasing access, and lowering costs. To that end, even though it is unclear what products Walmart will be offering, we welcome them and wish them success. It is refreshing to see a large, international company realize that fintech is the future of financial services.
“Our members know that lending to nonprime credit populations is difficult and losses are greater. As economists at the Federal Reserve have found, smaller loans require higher interest rates compared to larger ones due to fixed costs associated with any credit product. Wal-Mart’s entry will not change this basic fact and despite deep pockets and a readymade customer base, we do not foresee their entry as widely disruptive, should they offer products similar to those offered by our members. As Wal-Mart builds a fintech company, we believe they will seek to avoid incurring losses and as a result will skim the market for lower-risk consumers and leave millions Americans without access to credit, similar to other marketplace lenders.”