Stripe, a digital payments startup company founded five years ago, offers simple software and services for online merchants. It is similar to PayPal in that it accepts payments through credit or debit cards and charges small fees for these transactions.
The company has been able to gain additional backing from investors like Visa, American Express, and Sequoia Capital in its new round of funding. Stripe did not provide any details on the amount of new funding but said that it is less than $100 million.
Digital Payments Landscape
Digital payments is becoming a more competitive field these days, with the emergence of cryptocurrencies like bitcoin that guarantee minimal to zero transactions costs. The recent split of Ebay and PayPal in operations has also allowed the latter to put more focus in online payments and expand its services.
Stripe also announced a new partnership with Visa in terms of improving digital transactions, which could involve additional features like integrated buy buttons on websites and initiatives like increased payments security.
“As Stripe thinks about the best ways to move the overall payments ecosystem forward, the biggest determinants on the financial side are the credit card networks,” Patrick Collison, co-founder and chief executive of Stripe, said in an interview. “We hope to continue working closely with them.”
Visa has been keeping close tabs on developments in the online payments industry, especially since PayPal is starting to focus more of its efforts on debit transactions with larger profit margins. “They also have a very big business that they then use our transactions to mine from, to disintermediate our clients’ relationship with us,” chief executive of Visa Charles W. Scharf added.
Nonetheless, the recent round of funding and partnership with Visa could mean broader horizons for Stripe. According to Michael Moritz, a Stripe board member and partner at Sequoia Capital, “The fact that Visa has chosen to invest in Stripe, not in PayPal, is of absolutely huge significance.”
