Paul Graham, the godfather of Silicon Valley’s venture capital, recently publicly praised U.S. payment platform Stripe as the next Google.
We know that Paul Graham, an early investor in Stripe, should be very pleased with Stripe’s success. But why did he elevate Stripe to the same level as Google?
What services does Stripe offer and what potential does it have?
Making It Easy to Receive Money
Accepting cash for payments in a store is straightforward. However, if you accept not only cash, but credit card, debit card, QR code payments, etc., things can be complicated. You need to manage your own financial system, and also connect to the financial system your customers use. And financial systems can be fragmented, complex and have different structures.
It’s even more complicated for an online store. Customers come from all over the world, use different currencies and payment systems. Not only you can’t handle it yourself, your bank might not be able to handle it as well. And we have not even touched on anti-theft preventions, refunds, storing customer details, accounts and other needs.
What Stripe provides is an integrated payment platform. It answers the above-mentioned fragmentation and complexity problem with software. It provides a few lines of simple code for stores to embed on their purchase page, following which payments will then be handled by Stripe.
The following is an figure from its website. Users won’t notice that the payment is handled by Stripe. And store owners can monitor sales figures in the back end dashboard.
Stripe acts like a middle man to connect customers to stores. Currently, Stripe can accept 135 currencies, support various credit cards, Alipay, WeChat payments, mobile payment (such as Apple pay), bank collection and payment (ACH) and more.
Stripe takes some commission from each transaction. The commission might not be the lowest, but because it solves an important pain point, stores are willing to pay. Stripe encrypts the payment information of customers, so that the store does not have access them, making it more secure. Store owners only need to pay Stripe when there is a transaction. There are no start-up or ongoing costs.
Amazon, Microsoft, Zoom, Uber and other large enterprises are already Stripe customers. These customers don’t have to worry about payment process and can focus on their own areas of expertise.
Targeting Developers
Stripe’s approach to getting corporate customers is quite different from that of traditional players. It markets to developers.
The original name of Stripe was /dev/payment. This shows that it has always been a service for developers. In addition to its excellent products, its software is comprehensive, the interface is simple, and customer support is fast and reliable, becoming the benchmark of the software industry. Developers find its “copy and paste” to embed Stripe payments easy to implement in their systems.
API as a Service
The standard product of traditional B2B software service providers, such as Microsoft, is “Software-as-a-Service” (SaaS). For example, Office 365: customers pay according to the length of time they use the software. But for Stripe, its rather a “API-as-a-service” where one is charged according to the number of times the API is used.
As an API, enterprise customers do not need to download, install, maintain, update, or worry about “entanglement” between Stripe code and their own code. They simply call the API. At the same time, the API can be continuously updated and evolved. Customers enjoy the collection of all the latest knowledge and technology of Stripe.
Extending Their Product Lines
From “payments”, Stripe has now extended to many product lines.
Potential of Stripe
From a macro perspective, Stripe’s long-term potential comes from three sources:
First, the Internet has opened up the global market, increasing the urgency of shop owners to accept global payments. Yet, fragmentation and complexity of different payment systems is growing.
Second, shop owners cannot afford to hire developers to implement payment functions for their software. Thus, they need easy and ready to use software services like Stripe.
Third, as the Internet grows, new ventures and companies emerge. These increase the pool of potential customers for Stripe. Also, there will be new users for these companies. And when Stripe’s customers do well, it makes more money. From this point of view, Stripe is more like the next AWS rather than the next Google.
The greatest advantage of Stripe is its two young founders Patrick Collison and John Collinson. Both are brothers where the elder brother is only thirty-two years old and the younger, thirty years old. Both are talented, well-read, and work well together.
What’s more valuable is the resolve and competent skills that make Stripe not only an outstanding product, but with strong execution and stable operations. There are almost no scandals, major mistakes or personnel issues associated. It can be said to be the difference among unicorns.
Stripe serves any business that can be done on the Internet. As a result, Stripe also helped to build a mass fund-raising tool and supports bitcoin payment (which was later cancelled due to slow settlement and unstable currency value). Today, the Internet economy still accounts for only a single digit proportion of the global economy, so Stripe has a long way to go.
