Walmart Sues Capital One To End Its Credit-Card Partnership

(Bloomberg) -- Walmart Inc. asked a federal court to allow it to end its credit-card partnership with Capital One Financial Corp., saying the bank has failed to meet critical standards for customer care.

Walmart and Capital One entered into a contract in 2018 that made the bank the sole issuer of the retailer's private label and co-branded credit cards.

“Unfortunately, Capital One was consistently unable to meet the customer-service standards required by the contract,” Walmart's lawyers said in a lawsuit filed Friday in Manhattan.

Capital One failed to meet customer care standards in at least five “critical” categories, including delivering replacement cards to customers within five days and promptly posting transaction and payment information to cardholders' accounts, according to the lawsuit.

A Capital One spokesperson said Walmart's 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 bank had approximately $8.3 billion in ending outstanding loan balances through the card program as of Dec. 31 and it produced approximately $214 million in net income after taxes last year, the company said in a filing.  

“These immaterial servicing issues were cured by Capital One pursuant to the terms of the agreement, without harm to customers, the program, or Walmart,” the spokesperson said in an emailed statement. “Capital One disputes that Walmart has any right to change the terms of the existing partnership mid-stream, and we will vigorously protect our contractual rights in court.”

Walmart said it planned to offer a new credit-card option soon. “In the meantime, cardholders should not experience any disruptions in service and can continue to use their existing Capital One Walmart credit cards,” the Bentonville, Arkansas-based retailer said in an email. 

The case is Walmart Inc. et al v. Capital One, National Association, 1:23-cv-02942, US District Court, Southern District of New York (Manhattan).

--With assistance from Brendan Case.

(Updates with Walmart statement in eighth paragraph)

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