Stripe: The developer-first payment unicorn

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer – No.3 influencer in the finance sector by Refinitiv Global Social Media 2019

Stripe is one of the most well-funded private Fintechs. With a $36billion unicorn valuation in a sector that is in growth mode, it seems unstoppable. Global e-commerce is currently estimated to be a $4trillion sector with huge upside potential, as it currently accounts for only 8% of total commerce (eMarketer stats reported by CB insights). Of course, there is incumbent and Fintech fierce competition that cannot be ignored. Think Paypal, Square, Brex, Marqeta, Google,… etc.

Stripe (much like Square) continues to build a fuller stack towards creating a magic glue that keeps together a sustainable ecosystem. The fuller stack goes beyond the core service which is focused around making payments easy for small businesses that want to transact online. Stripe Connect, for example, facilitates more complex transactions for marketplaces, from subscriptions to virtual cards, and loans. Stripe Atlas, makes it fast and cheap to set up a US corporate entity in the US and has had great successes especially for foreign entities. Stripe is actually already very international, operating in more than 120 countries and plans to use its recent funding ($600mil, April 2020) to expand to Southeast Asia and Latin America.

Stripe`s stack is growing and CB insights gives a detailed overview with facts and figures for the private company, in its August report. Stripe is in payments, in e-commerce, and in banking services for small and large businesses. Stripe`s clients include the likes of Amazon and Salesforce, Grab and Booking.com, Zillow and solopreneurs like myself. Simple & complex payment processing, virtual cards, loans, processing business operations, billing etc. You would think that their institutional salesforce would be focused on CFOs that are selecting vendors to support their companies’ financial needs. Stripe, however, differs considerably from Paypal or Google Checkout and Microsoft Passport, in that it works without the need of a huge saleforce, customer support. Most importantly, Stripe integration does not result in diverting the company`s website traffic into the Stripe ecosystem, as Google and Paypal do.

Stripe`s innovative approach and secret sauce, is based on their focus on the developer community from Day 1. The mindset is that payments are code and therefore, let’s build tools for the developers to make any kind of integration simple and seamless.

This choice has shifted the vendor selection process, away from the CFO (typical) and towards the developer community. In other words, Stripe is a DIY service that developers love. It is self-hosted and it seems that VCs love Stripe too as they continue investing.

I checked the Github activity of Paypal, Square, and Stripe. Stripe has 6million commits, Square has 2million and Paypal just 360k. The gap is wide, which shows the power of a self-hosted system in a purely digital world. The word-of-mouth effect is also very strong for Stripe. The only question mark is the lack of transparency from Stripe (being a private company) regarding its revenues and profit margins.  CB insights reports only payment processing volumes which are just part of the picture. From the client-side, Stripe has managed to cut operational costs (on average) by 24%.

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