Stripe, Inc. is a technology company that provides an online payment processing tool for companies and individuals worldwide to accept payments over the internet. It has its headquarters in Dublin, Ireland.
It was founded by Irish brothers Patrick and John Collison in 2009 and started as an online payments company. It has since expanded into a suite of products that facilitates online internet transactions and internal corporate and external business-to-business (B2B) payment service capabilities for businesses.
The company currently controls a market share of about 16.67% in the global payments industry with its online payment processing service. It recorded revenue of $7.4 billion in 2020, with investors valuing it at $115 billion in 2021.
Stripes Business Strategy
Stripe has since developed into a platform that helps businesses easily credit and accept payments on any website or app. It allows them full control over the payment form using dashboards, allowing adding features or building forms.
The company continues to develop its technology for mobile devices and apps, integrating with existing hardware via plug-ins that do not require additional software or programming expertise.
Its staying focused on providing the best possible product, its extensive documentation for various platforms and devices have helped it create a developer community that is excited about creating new solutions on their platform.
Stripe’s Revenue Model
The company offers several products; Stripe Connect (developer tools), Stripe Terminal (iOS card readers), Stripe Radar (real-time fraud detection), and Charge API. It also has a mobile payment processing service called Stripe.js, allowing developers to embed credit card payments into Web apps easily.
It makes money through interchange fees and a percentage of the volume processed for each transaction. It earns more on larger transactions, with its higher fees also ensuring it doesn’t get undercut by payment companies that charge less but make up for lower fees by processing a lot of smaller transactions.
Stripe’s Growth Strategy
The company believes that the open internet has created an opportunity to bring business and consumers closer through technology. There will certainly be growing demand for online payments due to rising e-commerce purchases on Amazon, eBay, and Alibaba.
It buys, builds, and partners for technologies that will help it solve industry problems. The recent acquisition of Bouncer, a security product that allows Stripe to detect and prevent fraudulent transactions, is a case in point.
Market and product development will define the growth opportunities. The company strives to provide the best products and assist new businesses in leveraging its technology to reach broader audiences while enabling existing businesses to adopt online payments more easily.
Stripes’ SWOT Analysis
- Strong Global recognition: Stripe is one of the most recognized tech brands in the world. In a time when Silicon Valley companies such as Facebook and Google have come under scrutiny for their roles in enabling bad actors and being profligate with customer privacy, Stripe, a relative newcomer to the scene, has won plaudits for its approachability. It has a reputation for design that feels good, with a decidedly humane feel that stands in stark contrast to the usual tech company aesthetic.
- Strong developer community: Stripe has been gaining the favor of developers by offering an easy-to-use service, making payments a simple process for app makers that allows coding in just about any programming language. The company also holds conferences and meetups worldwide to educate developers on its technology, and it gives them resources such as APIs and documentation to help ease their work.
- Strategic partnerships: Stripe recently partnered with Alipay and WeChat Pay in China. In addition, they announced an integration with Apple Pay, thus allowing users to use the existing payment information already stored within their Apple account for transactions without entering credit card details again and again.
- Backed by Worthy Investors: Major venture capital firms such as Sequoia, Khosla Ventures, Andreesen Horowitz, and Venture Capitalists have invested in Stripe. The company’s valuation has increased over time — from $5 billion in 2015 to $115 billion in 2021 (Forbes)
Low chargeback risk: Stripe has a low risk of chargebacks due to its efficiency and reliability. Its ability to continually innovate new online payments via open APIs makes it almost impossible for fraudsters to survive using the service.
- High Costs per transaction: Despite its transparent and allegedly low pricing, Stripe still charges higher fees than PayPal and other competitors. It charges 2.9% plus an additional 30 cents as its cut for every transaction. The higher fees have caused some businesses to use their competitors, such as PayPal and Square, which charge lower rates.
- Plans to go Public: Stripe is planning an IPO and has started filing for a confidential treatment request with the US Securities and Exchange Commission (SEC)
- Growing E-Commerce Sector: With the growing e-commerce sector, e.g., Amazon and Alibaba, there is a pressing need to set up an efficient payment system to streamline the online payment process. This has led to more customers relying on Stripe to make payments for goods and services they want or need.
- Highly Competitive Market: Stripe faces a highly competitive and regulated market. However, it has a clear advantage over competitors due to its flexible technology, simple pricing structure, and wide range of support for third-party software (e.g., Quickbooks). If Stripe can stay ahead of the competition by offering new services and improving existing ones faster, the company will be highly successful in the market.
Stripe Competitor Analysis
Many competing companies like PayPal, Square, Payoneer, Braintree, and Authorize.net are vying for a market share by offering better customer service. Stripe faces intense competition from all these companies because they provide similar solutions.
PayPal is one of the dominant players in the online payments market. It has been operating since 1999 and aims to be a digital wallet that enables fast payments across devices through multiple platforms (i.e., iOS, Android, or desktop). To date (Q2 2021), it has more than 400 million active accounts and processed more than 310.99 million in payments.
It currently controls around 55.58% of the online payment industry and is still growing. It has a strong presence in the market, which makes it Stripe’s biggest competitor. One of PayPal’s unique selling points (USP) allows customers to use their accounts for other online applications such as digital subscriptions.
In 2020, it recorded a revenue of $21.45 billion and was expected to surpass the $50 billion mark soon. Its main competitive advantage over Stripe is its broad acceptance in online payments — you can use it for businesses and individuals.
Similar to PayPal, Square is a significant player in the online payment industry. It was founded by Jack Dorsey and Jim McKelvey in 2009 and now provides services globally through its online platform. It has its headquarters in San Francisco and is still expanding to US states and other countries.
As of May 2021, its active users were more than 10 million globally, with $29.8 billion in gross seller payment, increasing from $24.7 billion the previous year.
Its pricing structure is simple and also lower than Stripes’. It charges 2.6% + 10 cents per tap, dip, or swipe. It also offers free POS software and free customer support. Since it has a fair business model, many businesses are turning to Square for their online payments.
While Square is only centered in the POS market, Stripe goes beyond by offering an API, where businesses can use Stripe to power other software. Stripe’s main advantage over Square is its broader range of support, making it much easier for developers to integrate Stripe payments into their applications.
Payoneer was founded in 2005 and provided online payment services for individuals. It is headquartered in New York City but serves clients globally. Its main USP is that you can send money to people worldwide, no matter where they are or what currency they use.
It has a strong presence in emerging markets such as Asia-Pacific, South America, and Africa. One of its major goals is to provide access for all individuals worldwide to make global payments.
In 2020, it recorded revenues of $110.9 million. The company is still expanding and striving to become a global online payment system. It processed more than $44 billion in transactions across its 4 million users in the same year.
Its main competitive advantage over Stripe is the international payment feature since it serves people from all walks of life. This gives Payoneer a strong foothold in the market and allows individuals to send money online globally.
Authorize.net started operations in 1996, providing online e-commerce solutions for merchants. It is one of the most widely used credit card processing services, with more than 90,000 customers worldwide.
It’s owned by VISA and has strong brand recognition. Since VISA owns it, it can provide the best fraud protection and secure transaction services for online businesses.
The Authorize.Net API for Business provides access to merchant accounts, recurring billing, and a customizable interface. It offers secure online payment systems for merchants and works seamlessly with Stripe Connect (Stripe’s API).
Significant advantage: VISA is the most recognized brand in credit cards, and the merger with Authorize.Net gives strong credibility to their services. This advantage also makes them an unavoidable hurdle for new entrants into this industry. They can engage with companies that use VISA credit cards such as Square or PayPal directly without going through other service providers.
Adyen is a relatively new player in this industry. It started operations in 2006 and provides online payment solutions for businesses, serving thousands of business customers worldwide.
It’s headquartered in Amsterdam, Netherlands, with offices in 23 countries. It serves customers globally, offering a comprehensive set of payment solutions. It controls 18.50 percent of the payment management market and is growing rapidly internationally. It boasts more than 2,300 employees worldwide.
It controls 0.03 percent against Stripe’s 16.67 percent payment processing market, with over 224 companies using the software (Datanyze). Its main competitive advantage is its scalable payment processing platform.
The company processes payments for leading companies such as Uber and Spotify. It’s a good platform for small businesses that can scale up at any time.
How Stripe Stands Out Against Its Competitors
Stripe delivers an exceptional customer experience. It delivers reliable service to its users with an easy and quick payment process. Stripe is often considered one of the most intuitive payment solutions for e-commerce sites.
It has a robust API that helps drive business for software developers. Stripe’s ability to partner with other businesses gives it better reach, making it efficient at scaling payments in the market. It doesn’t have much competition within the online payments space since PayPal focuses on retail stores or financial institutions than individuals.
The company focuses on developing high-quality software that provides an excellent experience for its users and complements the existing software of major e-commerce sites. This keeps Stripe competitive in the market. It helps it attract more clients, appealing to customers because of its features and seamless integration with other platforms such as WordPress or Shopify.
Its marketing strategy includes getting new clients through news articles and media reviews, which helps create brand awareness. Content and Email marketing activities help build trust and attract more clients. It focuses on word-of-mouth marketing to bring in new clients, a strategy that has proven effective for them as they continue to grow steadily throughout their years of operation.
Product development is a key focus for Stripe. The company is developing more features and services that simplify payments online, enabling customers to purchase using a mobile device or even your dog’s name.
Stripe has lots of funding ($487 million) from investors, adding to its competitive advantage in the market. The cash allows Stripe to build more products and services that help it breed new competition, ensuring it stays on top of its game.
FAQs About Stripe Competitor Analysis
Question: What companies are similar to stripe?
Answer: Stripe is mainly involved in providing payment solutions. When it comes to its competitors, PayPal and Square are the main players. Stripe functions as a payment processor, while PayPal acts as a gateway, with Stripe functioning more like Square.
Question: Is Stripe a competitor with Square?
Answer: They are both service payment providers for merchants. Stripe provides solutions for online businesses, while Square is focused on POS sales using a mobile device.
Question: How does Stripe make money?
Answer: Stripe charges fees from its clients. It earns from the transaction volume of all its merchants.
Question: Why is Stripe so popular?
Answer: Stripe is focused on providing great software that works seamlessly with other platforms. It provides all the tools needed to make accepting payments online easier for businesses.
Stripe’s well-funded business model, easy API integration, and reliable service give it a competitive advantage. Stripe continues to expand its reach with new products and services that bring value to clients. The data shows Stripe is one of the many innovative companies in Silicon Valley and has huge potential for growth as it deepens its roots in the market.
Although its share of the online payments market is currently low, it has lots of room to grow as e-commerce payments continue to expand and grow. As Stripe continues to build its brand awareness globally, it will attract more clients across borders. The company can thrive in this competitive industry as long as it maintains its focus on innovation.