Payment startup valued at $9 billion
The digital payments sector has ushered in a competitive market as services try to outperform each other.
And that market is now even more crowded after Stripe Inc. was valued at $9 billion after previously being valued around $5 billion in 2015.
CapitalG, which is part of Alphabet Inc., led the new round of funding with $150 million in startup financing. Prior investors also participated in the round, and to date, Stripe Inc. has raised more than $400 million.
The Wall Street Journal called the company the most valuable financial-technology startup. Investors believe Stripe will be able to capitalize on a growing trend among consumers that sees them transferring money to internet retailers. Stripe Inc. is also in position to benefit from the growing number of online payments.
What is Stripe?
According to Bloomberg, Stripe allows businesses to accept online payments with ease. These payments can be standard credit, to bitcoin, Apple Pay and Android Pay. Companies also have tools at their disposal to handle security, billing, accounting and fraud detection.
Interestingly, Stripe Inc. has managed to succeed at a time when similar fintech startups are faltering. Competitors aren't experiencing much growth because banks are releasing products consumers enjoy using. Customer trust and regulatory powers are two other areas where banks have a distinct advantage.
Stripe Inc. separates from the pack because it focuses on mobile commerce. These are the payments conducted entirely over the internet and don't involve the use of card-swiping terminals. Some of Stripe's largest customers include Facebook and Lyft.
However, Stripe Inc. has managed to attract traditional retailers. Target Corp. and Macy's Inc. all utilize software from Stripe Inc.
What does the future hold?
Stripe Inc. was founded in 2010 by two brothers, Patrick and John Collison. In six years, it has made a name for itself because of its software's simplicity that allows users to circumnavigate standard agreements with traditional payment providers.
Stripe expects even more growth in the coming months. According to The Journal, Stripe Inc. hasn't yet approached the payment volume of Square Inc, its closest competitor, but it will soon enough.
Furthermore, Jay Ritter, professor of finance at the University of Florida, told Bloomberg that Stripe Inc. is likely positioning itself for an initial public offering.
"Stripe is obviously big enough to appeal to public market investors and cover the fixed costs of going public and being a publicly traded company," said Ritter.
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