The MoneyTree 2019Q1 report jointly released by CBInsights and PricewaterhouseCoopers shows that the payment founder Stripe ranked fifth in the US Unicorn valuation with a valuation of US$23 billion, second only to Airbnb.
After nine years of establishment, Stripe has completed several rounds of financing. Although the founder said that there is no listing plan in 2019, this does not prevent Stripe from continuing to be sought after by the market.
The company won a $100 million investment from Tiger Global Management in January. How did it become the most highly valued financial technology company in the US?
Paying by copying and pasting
Prior to founding Stripe, Patrick Collison and John Collison brothers also developed software for eBay sellers in Ireland. Unfortunately, local investors lacked this interest, so they took the company to Silicon Valley to seek a different financial environment and investment culture.
In 2008, the brothers sold their online auction site Auctomatic for $5 million, and noted the shortcomings of the current payment system in the e-commerce sector: “The entire online payment mechanism is fragmented and requires a uniform The layers tie all the elements together.”
They also believe that PayPal, the leader of the electronic payment market, is not able to meet market demand, so in 2010, Stripe was established in San Francisco and received the first capital injection with the help of Y Combinator. At that time, the Irish brothers were only 22 and 20 years old.
Compared to PayPal’s more focused C-side users at the time, Stripe chose to target the B-end market, specifically for the match between the company and the payment account. They noticed that in the market, a large number of small and medium-sized startups tried to add payment functions within the product, but due to the high development cost and complicated banking transaction system, the payment service was delayed.
According to industry analysts, Stripe has seized the pain points of the lagging, inefficiency, high fees and complicated procedures in the European and American payment industries.
It is understood that this company provides a network payment processing solution for enterprises, similar to domestic aggregate payment. Unlike the confusing and complex banking payment system, Stripe claims that whether it’s a mobile app or a website, you only need to copy and paste a small piece of the code and API they provide in the backend of the product to get instant access to its payment facility. The user enters credit card information to complete the payment transaction, and Stripe collects the fee or service fee for profit.
For cross-border e-commerce platforms, such cash flow services can greatly simplify the website payment process, consumers can fill in the email, credit card number, CVC credit card verification code to checkout.
Compared to other competing products, Stripe’s advantage is that the asking price is low, and the startup only needs to pay 2.9% of the transaction amount plus a uniform handling fee of 0.3 US dollars. In addition, when it comes to different platforms and different payment schemes, Stripe’s operation is much simpler, without the need for developers to make complex choices and deployments.
It is worth mentioning that Stripe’s customers are not limited to e-commerce. According to reports, like “Running Leg Service” TaskRabbit, design platform dribbble, media website Wired are all Stripe customers, each has different payment needs, such as transaction sharing, monthly subscription fees, etc., Stripe provides based on these differences in demand. Different payment options.
After laying the foundation for payment services, Stripe began researching the sideline. In 2016, they launched the Stripe Atlas service to help start-ups quickly and easily expand their business to the US market, including registering companies, opening corporate bank accounts, tax IDs, and providing one-stop services for online business and payments. Will face problems.
However, although Stripe has been expanding its product line to support different online business models, such as e-commerce, companies that need to issue their own credit cards, etc., the online payment process has not been unified, so they have to work with third-party vendors. This dynamic trend prompted Stripe to accelerate the development of offline payments. In 2018, Stripe Terminal went live, extending its payment infrastructure to the physical world, enabling developers to build customized payment experiences for live transactions like online merchants.
In the same year, Stripe also began testing small-scale prepaid cash for business owners, and the working capital will be paid within one to two days after the application. The loan will be deducted from the merchant’s daily sales at a fixed percentage rate.
What does globalization bring to Stripe?
TechGrits noticed that in terms of business, Stripe started from the online aggregation payment as the starting point and the cornerstone, and derived the financial service system with the enterprise as the main line, which is closer to the financial institutions such as Silicon Valley Bank. Cooperation.
On the other hand, economic globalization is also one of the important reasons for the smooth development of Stripe. Patrick Collison said in an interview with the media that at the beginning of his establishment, he believed that the world is developing in the direction of increasing globalization, economic stability and international trade. From the professional experience of the Collison brothers and Stripe’s initial business, it is easy to see that building software and payment infrastructure to help companies complete cross-border capital transactions online is one of the key points for their rapid market share and valuation.
Therefore, such a market environment has undoubtedly become a fertile ground for the growth of payment companies such as Stripe, and they have also made a global route.
For the interpretation of the globalization strategy, the Stripe team used to say that this may be a New Zealand-based user who can use American Express’s credit card to buy things from a Kenyan merchant, and the Kenyan merchant uses it when collecting money. It is the most commonly used M-PESA SMS payment system in the country. Bitcoin can even be imported into the Boleto transfer channel in Brazil.
It is understood that the current Stripe business has covered 25 countries and regions including the United States and Japan. In July 2018, Stripe partnered with Alipay and WeChat Pay in July this year, allowing merchants around the world to accept payments from hundreds of millions of Chinese consumers.
However, Patrick Collison also stressed that “the global economic integration now faces more resistance than at any time in the past 20 years. Overall, this will make it more difficult for companies to expand globally.”
This will create more opportunities and challenges for a number of payment service providers, including Stripe. First, the amount of shopping through the Internet and mobile payment devices is expected to continue to soar. Second, cross-border payments are no longer limited to e-commerce and traditional financial services, and transaction demand in other industries is also increasing; Southeast Asia and Latin America are also due to financial infrastructure. Lack of, but has greater potential for payment market development.
At the same time, the process of international payment services is difficult to have uniform standards in a short period of time, and may become more and more cumbersome due to the impact of the macroeconomic environment, so more and more companies will want to pay for services like Stripe.
In addition, the preference of investment institutions for payment companies remains undiminished. Although China’s payment world is already the same as Alipay and WeChat payment, in the trend of international wind investment, mobile payment and cross-border payment are indeed blue ocean. According to the incomplete statistics of TechGrits. Since the beginning of this year, there have been several international investment and financing related to cross-border payment, such as the $100 million C-round financing of the global cross-border payment platform Airwallex (Air Cloud), and the acquisition of Ant Financial British payment company WorldFirst.
Benefiting from the global market environment and development strategy, Stripe has gone farther than many payment companies, but in the future, countries will inevitably have to face frequent confrontation, and will Stripe gain more market share?