Stripe – leading the way in fintech

Banking & Finance
| The European | 8th October 2018
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The San Francisco (USA) based Stripe is one of the leading companies in fintech. The company was formed by two Irish brothers, Patrick and John Collison in 2010. Over the period of eight years, Stripe has become a fintech star and has formed business partnerships with many businesses and not-for-profits. It processes payments for these entities via its different product offerings.

On 27 September 2018 Reuters reported,

“Payments startup Stripe said on Wednesday it has raised $245 million in funding, better positioning the company to expand to new markets globally and attract bigger customers.”

While elaborating the purpose of this latest fundraising, Stripe officials said,

“Stripe will use the funds to fuel growth in key overseas markets such as Southeast Asia and India, where it plans to tap into the growth of the e-commerce industry to expand its payment products. More than 500 million people in Southeast Asia and India are expected to become online customers in the next three years”.

Two things are important to note about this funding raising:

This funding round values Stripe at US $20.25 billion. (Up from a $9.2 billion valuation in 2016)

The funding round was led by billionaire investor Chase Coleman’s hedge fund Tiger Global Management, along with DST Global and Sequoia.

Before the news of this funding raising, the company had also announced a number of new customers, including Alphabet Inc’s Google, ride-hailing services Didi and Uber Technologies Inc and music streaming service Spotify Technology SA.

Stripe also has plans to open a new engineering hub in Singapore.

In July 2018, Stripe partnered with digital payment providers Alipay and WeChat Pay to enable merchants using its platform globally to accept payments from hundreds of millions of Chinese consumers.

The above news and developments are impressive. However, to understand why Stripe has become so popular with e-commerce giants who process massive payment volumes, one needs to understand the product offerings of Stripe.

Stripe Payment Products:

Stripe Connect

This product is a “step-up” from Stripe’s simple payment processing product. Through this product, Stripe’s business clients can connect their e-commerce platform for seamless transaction processing “life cycle”. For example, Medium, a premium blogging website uses Stripe Connect to receive monthly subscriptions from its members as well as to pay its bloggers.

The important thing to note here is that all the “plumbing work” of processing payments is done by Stripe in the background. Medium’s platform is integrated via APIs (Application Programming Interface) to use Stripe Connect.

Another feature of this product is that it also offers business clients to build their custom GUI (Graphical User Interface) for processing payments. This makes their users’ shopping experience smooth and appealing as GUI matches the theme of the clients’ website and therefore “reflects clients’ branding”.

Stripe Billing

As the name suggests, this product offered by Stripe takes care of the billing process of its business clients. From customised bill generation to processing of payments, all integrated via APIs. This product can be integrated with e-commerce websites, mobile apps and CRM. It offers a dashboard feature for keeping track of the automated billing process.

Stripe Connect and Stripe Billing can be categorised as “basic product” offerings. Stripe has additional products which can be classified as “premium products”.

Stripe Sigma

This is a very advanced product meant for enterprise-level use. Information Technology staff of businesses can “run SQL queries” to analyse their Stripe data stored on Stripe’s servers.

There is no need for maintaining a local database. Consider it like a cloud product offering where customised reports can be accessed from a dashboard.

Finance departments do not need to maintain separate books for the purpose of recording and reconciling Stripe transactions.

Stripe team has not ended their efforts here. In fact, their techies have already set up some of the frequently used reports which the business clients can access from their dashboard.

Stripe Radar

Through this product Stripe has upped the ante. The readers of this post by now must have figured out that Stripe processes massive amounts of data and has state of the art systems deployed. Well, Stripe techies code complex algorithms which sift through its massive database using its advanced systems to identify fraudulent transactions.

Device fingerprints, historical snapshots, proxy detection and many more fraud detection techniques are employed. Stripe Radar is basically a “machine learning” tool that helps Stripe’s business clients to monitor fraudulent activities. Stripe revises its algorithms frequently to identify new types of frauds.

Stripe Atlas

It is a “one-stop shop” for getting your business registered in the USA. Business incorporation, agent services, legal and tax advisory services all are included under this product.

This is an expensive product. Business registration is not a complex matter. Forming a Delaware LLC is a no-brainer. Associated business services are also available at much cheaper rates on the Internet.

Stripe Issuing

Stripe Issuing is an end-to-end platform for quickly creating, distributing, and managing physical and virtual cards. Its infrastructure enables Stripe’s business clients to do things like creating employee expense cards with dynamic spending limits, generate virtual cards so marketplace couriers can pay with their phones at specific merchants, or run the entire card stack for a new digital bank. This service also deploys APIs.

This Product is not for all business clients. It is an “Invite only” product offering.

Future of Stripe

The variety and features of Stripe’s product suite are impressive. Both the brothers who founded this company have achieved a remarkable feat in a short period of time.

Stripe’s enormous valuation of US $20 billion, its “big brand” business clients, successful fundraising rounds and ambitious expansion plans show that this company will lead the way in fintech.

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