Stripe

Hello, fellow Olio enthusiasts! 👋

Happy Hump Day and welcome to the 39th edition of Weekly Olio - your weekly dose of giggles, wisdom, and a sprinkle of intrigue with our tantalizing thought piece (yes, we're talking about Publisher's Parmesan here). 🤭

A big shoutout to all of you for the fantastic support and feedback. Let's keep the momentum going in the days and weeks ahead! 😊

Today’s Publisher’s Parmesan talks about Stripe and its aim is to build and modernize online financial infrastructure in the service of its stated mission to “increase the GDP of the internet”.

Exciting, right? 👏

Will come to that, but let’s first start with the curation.

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The Quote󠀢 💭

The Tweet 🐦

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The Infographic 💹

Japan's real estate bubble of 1990 is unique. Land prices rose fourfold from 1985 to 1990. It was estimated that the price of the Imperial Palace land in central Tokyo was as much as the whole of California. By 2005 land prices were down 87%. The biggest ever wealth loss relative to GDP.

The Short Read 📝

Can’t Find A Mentor? Try My ‘Rule Of 10’ Instead - by Jyoti Bansal

Jyoti Bansal, alumnus of IIT - Delhi, is an American-Indian technology entrepreneur. He worked on various start-ups in silicon valley and later went on to found his first start-up - AppDynamics, an application performance management company.

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The above-linked article is a means to encourage you to seek insights from 10 diverse experts to enhance decision-making, foster innovation and elevate leadership skills. The rule of 10 is an alternative approach to traditional mentoring, believed in and passionately propagated by a successful entrepreneur!

Having faced skill gaps and limited guidance himself, interacting with 10 different experts allowed Bansal to yield an impressive success rate of 80%. It is essential today, for it facilitates comprehensive decision-making and problem-solving. Following this methodology gives you the ability to revolutionise your leadership acumen and enable you to make more informed and successful decisions.

The Long Read 📜

A Few Things We Learned- by Octahedron Capital

Founded in 2020, Octahedron Capital is a hedge fund manager based in San Francisco, California. The firm seeks to invest in technology companies across the globe with a mission to be the best partner to the world’s internet-scale businesses.

Commentary from the Payments and Fintech section: Consumer spending has not only normalized beyond the initial stages of the pandemic recovery but has also displayed remarkable resilience. This resilience can be attributed to the significant growth in e-commerce and travel-related expenditures. Moreover, while many countries have made substantial progress in their recovery efforts, it is worth noting that China's recovery is still on the horizon, promising further potential for increased consumer spending.

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Publisher’s Parmesan 🧀

Stripe

The growth of online commerce over the past two decades was paralleled by the growth of online payments. Merchants increasingly needed a way to accept credit card payments online from consumers. However, early options for this had drawbacks. PayPal, the most popular payment product of the 2000s, required buyers to set up a PayPal account and complete the transaction on PayPal’s website instead of on the merchant’s site, leading to friction and lack of control. Here comes Stripe and disrupts the whole ecosystem.

Stripe is like a handy friend for businesses who want to accept credit card payments with ease. They came onto the scene in 2010 and made a big splash in the payments industry. Do you know those big names like Amazon, Instacart, Zoom, Slack, and Shopify? Well, they all rely on Stripe for their payment needs.

Now here's the impressive part: millions of businesses, whether they're small startups or big shots in the corporate world, have embraced Stripe. Why? Because Stripe not only helps them accept payments smoothly but also handles payouts and keeps their online businesses in check.

But here's the real deal: Stripe's main mission is to give the internet's economy a boost. They want to build and update the financial infrastructure of the online world. It's like they're on a mission to make the internet richer, not in funny videos or viral memes, but in terms of actual money.

To understand Stripe better, let’s talk about some of its products.

Stripe's main gig is handling online payments, covering everything from simple one-on-one transactions (Stripe Payments) to fancy-schmancy multi-party payments that platforms and marketplaces need (Stripe Connect). When they first started out, they put all their energy into perfecting these core services. But then, in 2015, they decided to spice things up and started launching new products more often. It's like they went from playing one instrument to forming a whole band of cool features and offerings.

Payments

Stripe's bread and butter is payments. It's like their superhero power! They offer businesses an API (that's geek-speak for a fancy tool) to accept online payments from customers all over the globe. All they have to do is sign up, connect their bank account, and voila! They can start accepting payments using Stripe's magic API.

Here's where it gets even more impressive: Stripe handles payments in over 135 currencies. That's like being fluent in payment languages from all around the world! And it's not just about cards—Stripe supports all sorts of payment methods like digital wallets, buy now, pay later options (fancy acronym: BNPL), and good ol' bank transfers. They've got businesses covered in a whopping 197 countries.

So, whether you're a local boutique or a global enterprise, Stripe is there to make sure your customers can pay you easily and securely, no matter where they are.

Checkout

Instead of building their own fancy interface, businesses can use Checkout, which provides a ready-made checkout page hosted on Stripe's servers. Businesses can even add their personal touch to the Checkout page. They can tweak the colours, fonts, and shapes to match their branding and make it feel like their own.

By using Stripe Checkout, businesses can dodge those pesky checkout flow errors that often pop up. Plus, it's language-friendly, supporting over 30 languages. The Stripe team even goes the extra mile to boost conversion rates. They cleverly arrange payment methods based on the customer's location, increasing the chances of successful transactions.

Radar

To detect fraudulent activity, Stripe looks at various data points like customer info, shipping and billing addresses, and IP addresses. So, if a sneaky fraudster tries to use a stolen credit card number for an online purchase, Stripe's got their back. When a chargeback happens (that's when the true cardholder disputes a charge with their bank), Stripe offers Chargeback Protection. It means that whether the dispute is valid or not, Stripe will reimburse the disputed amount and even waive those pesky dispute fees.

But wait, there's more! For businesses who like to customize their fraud prevention, Stripe has something called Radar for Fraud Teams. It's like a toolbox that lets businesses set their own risk tolerance. Some businesses prefer to block payments aggressively, even if it means potentially flagging some valid ones.

With Radar, businesses can create custom rules. For instance, they can automatically flag payments above a certain amount if they come from specific email addresses. And with Radar for Fraud Teams, companies can improve their pattern recognition skills. It helps them spot related payments during the manual review process. They can even integrate their own data with Stripe's data using the Stripe Data Pipeline.

Connect

Stripe Connect is the payments powerhouse for online marketplaces and platforms.

Imagine ordering food through a popular on-demand delivery marketplace like DoorDash. The money you pay doesn't just go to DoorDash; it needs to be split between DoorDash itself, the delivery driver, and the restaurant. Similarly, when you buy something from an online store powered by Shopify, the funds need to be divided between Shopify and the store owner. Stripe comes to the rescue by processing the payment and then distributing each party's share of the transaction.

But Stripe Connect is not just about handling payments and payouts. It goes above and beyond by helping marketplaces onboard, verify, and screen users. They have this nifty technology called Stripe Identity, which ensures compliance and keeps things safe and secure.

Now, here's something interesting. Connect customers have options for making revenue. They can participate in Stripe's Revenue Share program or even add additional fees to transactions on their platforms. The money earned from these transactions usually takes at least one business day to reach the recipients, but Stripe can make it happen even faster with their Instant Payouts feature. It's like money teleportation—arriving in minutes instead of days.

There's more! Connect customers can also issue cards to their users with the help of Stripe Issuing. It's like having a personalized payment card specific to the platform or marketplace they're using.

This sounds amazing!

But who is Stripe’s customer exactly?

Stripe started off with a focus on startups and small to medium-sized businesses (SMBs). They wanted to make it super easy for developers to accept payments online. As time went on, they grew alongside these companies and expanded their services to cater to larger enterprise customers.

As Stripe's customer base expanded, they introduced new products to meet different needs. In 2012, they launched Connect, specifically designed for platforms and marketplaces like Shopify and Lyft that handle payments between multiple parties. In 2018, they rolled out Billing, which helps subscription-based software companies (SaaS) manage their payment needs. Companies like Figma, Slack, and Zapier found great value in this offering. Stripe also introduced Financial Connections in 2022, making it easier for B2B companies to handle payments involving bank accounts. Customers like Atlassian and Maersk in the B2B space benefited from these updates. With these adaptations, Stripe has been able to serve a wide range of businesses with different requirements.

Stripe has some pretty impressive partnerships too! They have deals with two major e-commerce platforms: Shopify and Amazon. Shopify Payments and Shopify Balance were built using Stripe's infrastructure. Shopify Payments enables smooth transactions between customers and Shopify merchants, while Shopify Balance provides business accounts and spending cards for Shopify merchants.

Stripe and Amazon joined forces back in 2017, and in January 2023, they announced an expanded partnership. Stripe will increase its usage of Amazon Web Services (AWS) as its cloud infrastructure provider. In return, Amazon will utilize Stripe to process payments for a significant portion of its offerings, including Prime, Audible, Kindle, Amazon Pay, and Buy With Prime, in the US, Europe, and Canada. It's a win-win situation!

Aside from Shopify and Amazon, Stripe has a bunch of other notable customers. Marketplaces like Lyft and Instacart trust Stripe for their payment needs, and companies like Ford, Slack, Figma, and even OpenAI are among Stripe's satisfied customers.

And, is there any competition to Stripe?

The payment processing space is a bustling arena with room for multiple winners. While Stripe stands out as a tech-forward player, there are competitors vying for their share of the pie. For SMBs, PayPal (Braintree) and Square pose as notable rivals. When it comes to serving enterprise customers, Adyen, PayPal, Checkout.com, and FIS are among the contenders.

On the international front, Stripe's success has been influenced by factors such as card penetration rates in different countries. In regions with higher card usage, Stripe has been able to make deeper inroads. It's worth noting that certain countries have also witnessed the emergence of local players known as "the Stripe for [country]." These companies, such as Razorpay in India and Xendit in Indonesia, have achieved unicorn status, reflecting their substantial impact and success within their respective markets.

So, what’s next for Stripe?

Currently, only a small percentage of companies engage in international transactions, with just 3% of companies operating outside their home countries as of November 2022. In the United States, Stripe's home market, only 1% of SMBs exported abroad as of 2017. However, technology is gradually reducing the barriers and complexities associated with international operations, which could drive an increase in cross-border transactions.

Stripe plays a significant role in facilitating international commerce by supporting payments from 197 countries and offering support for various payment methods. While Stripe may trail behind larger competitors like Adyen in terms of coverage, it surpasses smaller domestic players like Razorpay and Xendit. These local players often lack support for relevant payment methods outside their respective markets, whereas Stripe provides a more comprehensive solution for companies aiming to sell globally. This advantage is particularly beneficial for SMBs, as competitors like Adyen typically focus on enterprise customers.

Stripe's user-friendly payment processing solution has positioned it as a prominent player in the financial infrastructure of businesses, with a focus on startups and SMBs. As it continues to expand its offerings and target larger enterprises, efficient execution across its product suite will be crucial to stay ahead in the market.

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