Stripe: Revolutionizing the online payments space!

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With the mission to increase the internet’s GDP, Stripe is revolutionizing the online payments space. Since its launch in 2011, it has grown tremendously and is currently operational in over 25 countries. With continuously increasing adoption of Stripe, it’s no wonder that it is a darling of the venture capitalists who recently funded it at a $9.2 bn valuation.  Although being a private company, there is a lack of data but this widely public picture tweeted by Paul Graham in 2013 shows the kind of growth that Stripe started seeing back then and it still continues to grow at a fast pace as validated from the employee/valuation/geographical spread growth.

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But let us see, what enabled this phenomenal success story.

Stripe created value by

  • Focusing on a fundamental problem: For merchants looking to go online, setting up and being able to start accepting payments involved several manual interventions (phone audits, paper applications etc) and the process took significant time. The companies providing these payment solutions lacked modern code bases, APIs, client libraries and documentation was missing in most cases.
  • Being focused on the creators i.e. the developers: Post problem identification, Stripe set out to build a payments platform that could be setup instantly and scale to any size with the developer at the central focus of it. Developers who earlier had to deal with legacy systems were thrilled with Stripe which incessantly strives to create value for them. Some of the ways in which Stripe has created value for the developers are:
    a) A clean and easy to use payments API with robust documentation which has essentially forced other online payment solution providers to up their API game.
    b) Stripe provides a testing environment for developers with robust testing documentation. It provides a complete testing instance with every account so that the developer can test any functionality that he / she desires to test before deploying it to production. The fact that the deployment experience is designed to be a single click experience shows the care that Stripe has for the developers.
    c) Stripe has created and supports libraries for most popular programming languages. This helps the developers by saving them time in writing code to integrate the API into their code bases.
    d) Stripe has created very elegant user interfaces for the front end checkout experience (incase companies do not want to create their own front end experience), asking for only as much details as required in a simplified manner. A depiction of the neat frontend UI is below
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    e) Stripe supports data portability i.e. if a developer decides to leave Stripe, they will help in migrating the sensitive card data in a secure and PCI compliant manner. This is valuable to the developers when they are making a decision about the platform to go with as it shows that Stripe respects them and does want to lock them in.
    f) Stripe also helps developers follow good security practices by ensuring that card data never hits the servers of the developers.

Stripe has been able to create this significant value for the developers because of a few key factors:

  • Team: Stripe has been able to create a great product and been able to serve so many clients as a result of its exceptional team. They have created a great technology product handling complex financial interactions on the backend for several billions of dollars, have been able to provide extremely knowledgeable and responsive customer service and have been able to partner with high profile businesses such as Apple, Alipay and Twitter.
  • Leveraging Network Effects and the Social Element: As more and more developers signed up and started using Stripe, it helped Stripe to create a better and more robust product. In addition, the developer community is close knit and once a product earns their respect they spread it to other developers. Alongwith building a great product, by facilitating hackathons and developer events, Stripe was able to strengthen the community and ensure that developers keep on spreading good words about it.
  • Platform play: Stripe is not just a payment product but rather a platform facilitating other companies to build on top of it and extend their service which they are currently not able to provide.

Stripe captures value via a very simple pricing scheme – a pay as you go model, based on a percentage cut per transaction, with most of the product offerings included.

Stripe envisions itself as being the operating layer for global online commerce and has started offering products such as Atlas which help one setup an online business with full legal and tax advice. With e-commerce still in its infancy and more and more businesses looking to take the online route, the future looks very bright for Stripe as it strives to build products that help businesses run online more efficiently. With only 2% of commerce being online there is a lot of room for growth. Having worked for four years in a wonderful ecommerce company, Flipkart and witnessed firsthand the tremendous impact of ecommerce I am confident that a large number of entrepreneurs will take their operations online in the coming decades. As the co-founder of Stripe, Patrick Collision (the other co-founder is his brother – John Collision) echoing this sentiment, said, “our biggest customer has not been born yet.” This future growth of ecommerce will not only enable API based businesses such as Stripe to grow significantly but also enable us to witness more creativity as startup founders won’t have to worry about the underlying wiring of the digital economy.

Please let me know what are your thoughts about Stripe and the writeup.

Please See: I myself have not used the Stripe API yet, but have read several articles some of which are listed below and these views are a result of that.

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References:

https://stripe.com/about

http://www.reuters.com/article/us-stripe-funding-idUSKBN13O03B

https://pbs.twimg.com/media/BZhld7SCQAArcHa.png:large

https://growthhackers.com/growth-studies/how-stripe-marketed-to-developers-so-effectively

https://stripe.com/img/blog/posts/checkout-new-features/blog-post-hero.png

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