Stripe is a relatively new payments company that is undergoing tremendous growth and adoption rates. Stripe is the brainchild of sibling cofounders John and Patrick Collison. The two brothers both dropped out of Ivy League schools—Harvard and MIT—to work on a startup. Four years later, Stripe is poised to change the face of internet commerce.
The Collisons did not set out to revolutionize payments. Their first startup, Auctomatic, marketed a product to help Ebay merchants manage auctions. In the process of selling the software to merchants, they had experienced firsthand the complications and delays so often involved in collecting payments online.
The brothers set out to build a fix for themselves, to make it easier to collect payments in their own business. They quickly realized that they were not alone in this problem. With the entire online marketplace facing these same payment hurdles, the market need was obvious. The brothers changed their focus to smoothing the online payment process. Stripe’s first code was written in 2009, and after extensive beta testing the company launched publicly in 2011.
Simplifying Online Payments
Stripe makes it possible for businesses to collect payments from customers with just a few lines of code. While it requires that you have or hire the developer skills needed, Stripe simplifies the process of enabling payments. Using Stripe makes the checkout process seamless for customers by not requiring them to go to another site to pay. It’s a simple difference, but a big one.
The standard shopping cart process allows customers to put a list of goods together on a website, but when it’s time to pay they are shunted over to a payment processor’s site to complete the transaction. Stripe eliminates that step. In the process, Stripe reduces the time it takes to check out, and lowers transaction costs.
“It’s easy to send a packet of information anywhere in the world, but sending money isn’t so easy … It’s a question of the economic infrastructure that’s underneath the web. We personally think that’s a really important problem–you have great connectivity at the information level but not at the payments level.”
Stripe is so seamless, there’s a good chance you have already used it without knowing. It is available in 21 countries, with more being added.
Features & Integrations
Stripe provides an API and developer toolkit for incorporating the payment system into your own code, whether that’s a web store, mobile app, or anything. Through the Stripe checkout API, customers can pay for goods they order without ever having to leave the site, whether on desktop or mobile.
Sites and apps with a marketplace with sellers or contractors who need to be paid can utilize Stripe to route payments to vendors. This function is already used by services including Lyft, Kickstarter, and Instacart.
Stripe owes much of its success to its focus on catering to developers. This also means that Stripe offers plenty of features and integrations:
- Subscriptions – Recurring billing, any interval
- Coupons – Offer discounts to your customers
- Apple Pay and Android Pay – Incorporate these with a few lines of code
- Alipay – The payments giant that handles half the transactions in China
- Accounting integration – Feed real-time financial data to your accounting software
- Fraud protection and PCI compliance – Stripe takes this burden off business owners
- Supports payments in 138 currencies, plus Bitcoin
Stripe’s bitcoin integration requires users to have a U.S. bank account, and payments are processed to dollars with a 0.5% fee. Its fees for card processing are 2.9% + 30 cents, in line with industry averages and with discounted fees for higher volume. Stripe has no setup fees or monthly fees.
Steep Growth Continues
Stripe has seen incredibly fast growth in a very short time.
Starting with seed funding from YCombinator, followed by $20 million in Series A funding led by Sequoia Capital, Stripe moved to San Francisco offices in 2012. Series B and C rounds followed, raising over $150 million. The company expanded to Canada, Ireland, and the United Kingdom.
Stripe recently raised $100 million on a $5 billion valuation, in a Series C-2 round that included funding from American Express and Visa. Their services are available to merchants in 23 countries, accepting payment from anywhere. Stripe does not reveal the daily payment volume it handles today, but back in 2013 their one-day volume was higher than their first two years. This chart illustrates how steep the rise has been:
The company’s growth is utility-based. Stripe’s focus on simplicity for the developer carries over into simplicity for the end user. The ease with which anyone can sign up with Stripe and begin adding payments is in stark contrast to the days of merchant accounts, with lengthy checks and phone audits.
Stripe’s focus on mobile payment applications is likely to position the company well for future consumer spending patterns. Stripe’s Connect product makes it easy to incorporate Stripe payments into mobile apps, and Relay allows users to collect payments for sales made within third-party apps.
True to their word, Stripe is building the economic infrastructure “to increase the GDP of the internet.”