The retail giant is teaming with the investment group Ribbit Capital on the venture, which will aim to provide new services to Walmart customers and employees.
The company's plan had drawn strong criticism from bankers about Rakuten's potentially controlling an industrial loan company while engaging in its non-financial businesses.
On the same day the Federal Deposit Insurance Corp. said it will soon rule on two applications, the agency also proposed benchmarks for all firms that want to own industrial loan companies.
A decision by regulators on how to move forward with the controversial charter could have broad implications for fintech firms that want to enter the banking system.
The Rakuten application has piqued interest in reviving legislation aimed at stopping commercial firms from owning banks. Yet Congress previously had the chance to enact such a measure and declined.
The two companies agreed to continue to collaborate on a prepaid card program until 2027. The deal holds particular importance for Green Dot, which relies heavily on revenue generated at the discount retail giant.
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