WEEK

How the digital payments startup Stripe succeeded

digital payments

You may not know this startup name, but if you buy a lot online, you most likely used this company’s service. Stripe handles payments in North America, and in many European countries. Today it is in 25 countries. The company is worth $9,2 billion. And it started back in 2010 when two brothers from rural Ireland began to debugging online payment process. They built software connected the service with banks and credit cards, allowing merchants to receive payments quickly. At that time, building software for digital payments for own use took about six months of work, not including costs. From the very beginning, Stripe got traction among startups from Silicon Valley. As a result, it became an important pillar for such companies as Lyft and Facebook.

What brothers Patrick and John Collison created is an integrated system for digital payments. Thanks to it merchants on the web don’t need to have a dedicated bank account. Stripe processes and stores all transactions and data related to them. It is possible as well to pay workers through the service, what is the case with companies like Lyft. An easy way of payment processing was possible because of a lot of partnerships with banks, cards issuers, and others payment processing companies.
Stripe, recommended by Apple regarding Apple Pay service, it has also established a partnership with Alipay and WeChat what enabled Stripe to access Chinese consumers. Recently Stripe began cooperation with Amazon. Companies didn’t reveal the details, but Stripe started processing a large part of Internet giant’s transactions.

Striped received financing, including from Y Combinator, then also from, among others, Pieter Thiel, Elon Musk, and Sequoia Capital. In 2015 Visa became one of the new investors. Parties didn’t reveal amounts, but after the deal startup’s valuation jumped from $3,5 billion 7 months before, to 5 billion. Partnership with Visa enabled Stripe to use tokenization and opened the way to the international market.

Today Stripe has around 100 000 clients. The company doesn’t disclose details of its partnering with banks, and other financial companies, it doesn’t reveal financial results. However, estimates show that Stripe processes about $50 billion annually, what indicates that revenue amounts to about $1,5 billion.