Stripe’s Next Chapter — Layering the Digital Payments Infrastructure

As Stripe nears the end of its first decade of existence, the realization of its core mission is becoming ever so evident. While “increasing the GDP of the internet” may seem as ambitious as a mission statement can be, several recent announcements underline the authenticity of its desire. In the past six months, Stripe has announced the acquisition of Paystack, a partnership with Salesforce, and an expansion into five new countries. These three announcements exemplify how Stripe is making strides at scaling the internet economy:

· Paystack’s acquisition is notable for Stripe’s investment ambition, as it paves a successful path for a Stripe investment exit. More importantly, it demonstrates a willingness to invest in the digitization of the African continent. While the growth of African e-commerce and mobile adoption are evident, financial services incumbents had only made lukewarm efforts to grow its ecosystem. The acquisition shows that the internet’s GDP has no boundaries for Stripe

· Stripe’s partnership with Salesforce opens the possibility to embed payment capabilities for Digital 360 merchants. This move augments the value of Digital 360 by providing a one-stop-shop for merchants to manage all key operations to run a business. The partnership highlights Stripe’s role as an outsourced friction remover for digital commerce, and opens the possibility for a future roll-out to embed financial services within its customers’ ecosystems

· Stripe’s expansion into five new countries demonstrates its effort to scale globally — which cannot be understated. The launch in countries such as Malta or Cyprus are a testament towards Stripe’s ambitions to not only expand the internet’s GDP — but to do so irrespective of the size of the opportunity

Yet the key developments for Stripe are rarely found in its newsroom. Rather, these milestones are tweeted sporadically by the Collison brothers. In August, Patrick shared how businesses launched on Stripe had generated nearly $10B in aggregate revenue. The following month, John posted a rare peek into Stripe’s enterprise business numbers — including powering 40+ leaders with >$1B of payment volume each.

With all the attention surrounding its impressive growth and infallible product, the Collison brothers continue to state that Stripe has simply “set a good time to the first mile marker — nothing more.” Perhaps a secret to Stripe’s success is its humility, coupled with aspirations that are so bold that they are almost unimaginable. Which begs the question — what’s next for Stripe?

(1) Arming Digital Entrepreneurs

One in four of the 15,000+ founders that have used Stripe Atlas surveyed recently would not have started their company without Atlas. If payments was Stripe’s first advent into supporting digital merchants, Atlas represents a giant leap into digital entrepreneurship enablement. Atlas contains a suite of tools that makes it easy for anyone to start a business anywhere. Democratization at its finest.

Stripe has also ventured into publishing through comprehensive guides to demystify entrepreneurship, provided worldwide guides for businesses to seek Covid relief funding, and created immediate card issuance solutions. It wouldn’t be surprising to see Stripe continue to embed itself into entrepreneurship servicing, using payments as a base layer. If Stripe can support tens of thousands of founders worldwide to start their company — why can’t it support founders as they reach different steps of their company’s journey? What that means is yet to be seen, but John Collison has questioned the existence of a holding company supporting “a vast number of independent businesses” in tech.

(2) Globalizing E-commerce

The Covid pandemic created generational tailwinds for e-commerce, pulling forward a decade of growth in three months. Naturally, digitally native e-commerce players have flourished — yet plenty of friction remains. Only ~50% of UK consumers have ever bought something from online abroad. The proportion is starker elsewhere (<20% for Turks or Romanians, for example). It seems illogical that e-commerce remains a predominately domestic affair.

As Stripe continues its international expansion, it will be intriguing to observe how it begins to capture synergies with its global reach. Accepting payments worldwide across a common platform could be the foray into a uniform digital infrastructure. While this scenario may seem like a stretch of the imagination, its creation would transform digital commerce by an order of magnitude — and there aren’t many companies with the technical tools and intellectual capital to be able to execute it.

(3) Financing Through Diverse Asset Classes

As more and more businesses utilize Stripe’s products, Stripe is able to get a unique view into the anatomy of the internet economy. Many of its products rely on the data it gathers from businesses to prevent fraud or optimize reporting. This is clearly just the beginning. Stripe’s glimpse into a compounding network of startups can enable it to offer innovative growth financing products.

With data gathered from its suite of products, it wouldn’t be impossible for Stripe to help businesses scale by providing creative funding mechanisms. For example, Stripe could provide lending-as-a-service or securitize accounts receivable to provide liquid capital for founders. Ultimately, Stripe could offer a storefront of financial products to accelerate growth for entrepreneurs in the internet economy.

Granted, this all remains speculation. What’s true is Stripe’s ability to continuously excel at product execution, while generating a paradigm shift into what “a payments business” can be. While fanatics try to predict Stripe’s next move, the Collison brothers and Stripe’s revamped executive team will likely be focused on improving its core offerings — one atomic unit after the next. All the while, its enigma will continue to grow.