There’s a new kid on the block when it comes to digital payment options, and the big shots like PayPal and Square better watch their backs! Stripe is a “payment infrastructure built for the internet” and was started in 2011 by brothers John and Patrick Collison, when they realized there was a gap in the market of digital payments. Since then, Stripe has been one of the most mentioned payment on the web with top investors like Peter Thiel and Elon Musk on board and their valuation is going through the roof.
Recently, Stripe announced that it has landed a new round of funding which includes such credit giants as American Express, Visa and Sequoia Capital and it has brought the 5 year old company’s expected value to a whopping $5 Billion. This is quite a big leap since only 6 months ago they were valued at only $3.5 Billion.
What really gave Stripe the edge in this last round is it’s new confirmed partnership with Visa. The New York Times says they will work together to improve digital transactions and increase things like purchase security and the presence of “Buy Buttons” on sites. Even though Stripe is already available in over 20 countries, it’s partnership with Visa will propel it to international success anywhere where Visa is accepted.
You may be wondering why Visa decided to team up with a smaller start up company as opposed to one of the larger payment options like PayPal. Because Stripe is such a clean and easy to use interface, it’s popular with both merchants and credit card companies alike. It also encourages customers to use the credit cards that the company is associated with which means big sales for Visa and American Express. The same cannot be said for newly independent PayPal, however, which tends to steer customers towards using their bank accounts instead of credit cards because it’s cheaper and easier for PayPal to process. PayPal also has the ability to “siphon” customers from the credit card companies, which makes them wary to partner.
It seems this partnership is going to be a win for both Stripe and Visa, and if Stripe keeps gaining big time investors like American Express and Sequoia Capital, there’s no telling where they could end up in only 5 more years.