The power of the Stripe Treasury Baas

Writing good things about Stripe is cliché

Stripe’s mission is to increase the GDP of the internet by making it easy to launch and run an online business[1].

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 Treasury, one of the two new Stripe offerings, is creating a buzz and rightly so. This is not the first time, I write about Stripe, the most valuable privately held Fintech.

Stripe has had a developer focus in payments and the Collison brothers, John and Patrick, insist that they will not be seeking a banking license unlike several other grown-up Fintechs. The word in the market is that Stripe maybe raising more money taking its valuation from $36billion to $70billion.

Stripe Treasury, is its Banking as a service (Baas) offering for internet businesses and most appealing for marketplaces. A merchant Baas offering without being a Bank!

In practical terms, the Stripe Treasury API, allows for a seamless business account opening at any of its Bank partners. Stripe has started with Goldman Sachs and Evolve Bank (both FDIC insured) as its US bank partners and Citibank and Barclays for abroad. This means that Stripe enables a small merchant, any type of individual entrepreneur to benefit from the UX and value-add of a digital-first account opening and more. On the other end, Stripe`s bank partners benefit from a minimal customer acquisition cost and access to an overlooked by incumbents market segment.

The value proposition of the new Stripe Treasury API goes beyond just empowering directly individual businesses or small businesses. The Shopify Balance offering from the Canadian e-commerce giant, reveals the potential of the Stripe Treasury Baas offering.

Shopify Balance will be a new business offering for Shopify merchants, powered by Stripe Treasury. The Shopify Balance offers merchants a bank account at Evolve Bancorp, a card, and a rewards program. This goes beyond the existing partnership of Stripe with Shopify, for payments processing. It means immediate access to revenue earned, which can be spent via the card or transferred.

The Shopify Balance business offering, is a scalable solution for Shopify to offer financial services to its merchant.

As Ben Thomson founder of Stratechery says, Stripe isn’t simply a platform, it is a platform for platforms.

Let’s monitor the network effects of the Stripe Treasury offering. As of now, Enlyft reports that Stripe has about 44k companies using its services and 5.8% of the online payments market. The majority of companies using Stripe are small companies with revenues below $50mil (78%).  5% are large (>$1000M) and 11% are medium-sized. Currently, most of Stripe`s clients (top three industries) are in computer software, retail, and non-profit organizations.

[1] https://www.nasdaq.com/articles/stripe%3A-the-internets-most-undervalued-company-2020-09-01

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