Walmart has filed a lawsuit against Synchrony Financial, its credit card issuer for many years. They are accusing Synchrony of a breach of contract. Walmart contends some of the underwriting standards at Synchrony hurt Walmart’s business financially. Walmart is seeking damages of no less than $800 million. Synchrony had been the exclusive credit card issuer for close to twenty years until recently, when it was replaced by Capital One Financial.
The Wall Street Journal reported Walmart executives wanted Synchrony to share more of the revenue from the cards and approve more applicants. Walmart had expected to get more out of the deal with Synchrony. But loan losses, which were about 9% of outstanding balances on Walmart cards, impacted the amount it received over the years.
Walmart contends loan losses on Walmart cards increased after Synchrony moved some customers with Walmart-only store credit cards to a Walmart co-branded card. Synchrony had converted those customers to increase card usage and revenue, but it resulted in an increase in losses. That impacting the revenue Walmart was expected to receive from the Synchrony deal.