(Bloomberg) -- Walmart Inc. is considering moving its branded credit-card business from Synchrony Financial to Capital One Financial Corp. as it seeks to expand its mobile payments offering, according to people familiar with the matter.

The world’s largest retailer has narrowed the competition for its credit-card partnership to bids from the two lenders, said the people, who asked not to be identified because no decision has been announced. The negotiations are still ongoing, but the retailer is seeking a partner that can support its aspirations for Walmart Pay, the people said.

Co-brand and private label credit cards are a lucrative business for banks and retailers seeking to monetize a cardholder’s loyalty to a certain brand or store. The Walmart card is the largest program in the U.S. up for renegotiation between this year and next year, according to analysts at Susquehanna Financial Group.

A spokeswoman for Walmart didn’t have an immediate comment. Spokespeople for the two lenders declined to comment.

Synchrony’s partnership with Walmart accounted for more than 10 percent of the interest and fees the bank earned on its loans last year, the company said in an annual regulatory filing. The lender has said its five largest programs -- a group that includes Gap Inc., JC Penney Co. Inc., Lowe’s Cos Inc., Sam’s Club and Walmart -- made up the majority of such revenue.

The credit-card partnership is another way Walmart could compete against Amazon.com Inc., which has deals with JPMorgan Chase & Co. and Synchrony for its co-brand and private-label credit cards. Walmart isn’t likely to offer rich cash-back on its card -- that would go against the company’s ethos of offering low prices to everyone -- but it could use the card to drive more loyalty to certain businesses such as grocery, the people said.

While Capital One is a leader in banking technology, Walmart is aware of the risks associated with moving a credit-card portfolio between issuers, one of the people said. Citigroup Inc. and Costco Wholesale Corp. faced a deluge of customer complaints after the lender struggled to take over a portfolio of about 11 million accounts from American Express Co. in 2016.

Capital One Chief Executive Officer Richard Fairbank has been outspoken about the intensifying competition in co-brand partnerships, saying prices in the space can become “pretty breathtaking” at an investor conference in May. Capital One has partnerships with Cabela’s Inc., Saks Inc. and Neiman Marcus Group Ltd.

“While we want to be in this business, we’re not going to be in it at any price,” Fairbank told investors at a recent conference. “So that is why a lot of times we go to the auctions and in fact walk away empty-handed.”

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Alan Goldstein

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