Stripe continues to hold the title of the largest privately held fintech company, with a current valuation of around $65 billion and $1 trillion in total payment volume processed last year alone. But fintech is fragmented and a fast-moving target, and with competitors chipping away at its niche, Stripe is changing its approach.
Today, Stripe announced that it will decouple payments — its crown jewel — from the rest of its financial services stack. This is a big change, given that in the past, even as Stripe grew its list of services, it required businesses to be payments customers to use any of the others. At the same time, the company is adding a number of new built-in financial features as well as a new wave of artificial intelligence tools.
The updates were revealed at Sessions, Stripe’s big developer event in San Francisco, where the company said it would announce more than 50 (yes, 50) new features to its platform, part of a list of more than 250 (yes, 250) that have been announced so far this year.
That might sound like a lot of noise, but in reality, most of the list of new stuff is actually on the incremental side – updates and new features to older products that have already been announced.
“Our mission is to grow the GDP of the Internet. Our strategy is to listen carefully to the needs of the world’s most sophisticated and innovative businesses,” said Patrick Collison, the company’s CEO and co-founder, at the event. “This year, because of our scale, Stripe is well-positioned to help our users navigate the increasingly complex payments landscape and put AI to work to drive growth. We’re also making Stripe more modular, so companies can use only the parts of Stripe that are most useful to them.”
Stripe removing its requirement to use its payments API faces significant friction for customers and prospective customers who may have wanted to use some of the company’s other tools — which include fraud, risk and verification services, billing and invoicing , personal payments, financial account data, and more — but I didn’t want it to be all-in on Stripe’s larger platform. It marks a shift in how Stripe views its broader platform: in the past it has taken the approach that launching other services could help lure users to its payment services. Now it seems she is keen to explore how she can sell some of these non-payment services herself.
In an interview, Will Gaybrick, Stripe’s head of product, admitted that users have been asking the company to open up its walled garden for some time, but claimed that one of the main reasons it has delayed doing so until now is because in this. it is technically difficult to create integrations for legacy services.
On another level, it highlights an interesting shift in the market: companies like Stripe (and many others like Adyen) have taken a platform approach to payment services. They aim for higher revenue and profit margins per customer by becoming one-stop-shops. But the truth is, the market is vast and fragmented, and customers of all sizes have dozens, sometimes hundreds, of choices about what to use.
Indeed, some will want the freedom to be flexible, and some may well be locked into contracts, and some may simply want to work with multiple providers depending on the market in question, or de-risk using multiple platforms. This is clearly starting to become a bigger opportunity for the company. so he now opens his walled garden.
Other notable updates announced today:
Adding AI tools to checkout and cheat tools
Stripe has announced a new version of its checkout experience that will use artificial intelligence to provide a more accurate selection of payment options to customers based on location and what customers may have already used. To fuel personalization, it doubles the number of payment methods to 100. They include the likes of Amazon Pay, Revolut Pay, Swish, Twint and Zip.
“What we’ve heard historically is, hey, we need more coverage of payment methods if you want to go all in on Stripe,” Gaybrick said. OpenAI (which is also one of Stripe’s AI partners), Slack and River Island are among Stripe’s customers for this service.
Stripe said developers will also see more artificial intelligence when running A/B tests on the checkout flow.
On the fraud front, this is an area where Stripe is very much following market trends, where we see AI tools being added to a range of fraud detection services. In her case, she’s launching a new tool called “Radar Assistant,” which allows users to create new fraud tools on the Radar risk platform using natural language commands.
Great built-in up-to-date funding capability
Embedded finance — which involves companies, which may or may not be financial services focused, integrating financial products into their apps and other services to improve loyalty, revenue and customer experience — has become a growing area in fintech, with companies like Rapyd, Plaid, Airwallex and TrueLayer among the dozens of companies building and providing these tools to start-ups, fintechs and others. Since many “as-a-service” offerings also offer payments, it’s important that Stripe continues to develop its own integrated finance efforts, branded Stripe Connect, to stay competitive.
Today it announced a series of upgrades to bring the total number of Connect tools to 17, including 10 focused on different payment services. These include, for example, adding Stripe Capital to offer loans to customers, he said. Gaybrick told TechCrunch that Lightspeed, the point-of-sale company, makes 50% of its revenue now from integrated financial products, so it’s an important area for Stripe to continue to grow.
Usage-based billing upgrade
Stripe has, frankly, been a bit slow to build more sophisticated subscription and billing products, opening the door for companies like Paddle and more recent arrivals like Lago (which focuses on open source billing) to create much more diverse offerings for dealing with the wave of new technology and pricing for that technology in the market. These cover not only more granular and customizable subscription models, but also the introduction of usage-based billing based on whatever parameters customers want to create. Now Stripe is throwing its hat into that game as well, and today announced that Anthropic is a high-profile customer using the feature to customize how it charges and invoices for its API.
“For Claude Pro, we use Stripe Billing to manage subscriptions. For our API, we use Stripe Invoicing to facilitate the automation of accounts receivable, payment collection and transaction reconciliation. This improves the experience for both Anthropic and our customers,” Daniela Amodei, co-founder and president of Anthropic, said in a statement.
