Stripe’s Journey of Transforming Online Transactions Globally.
The perfect introduction for this would be something like “In an era where digital transactions reign supreme, businesses need robust solutions to manage online payments efficiently. Stripe — a powerhouse in the fintech industry, transforming the landscape of online transactions.” Well, I think it’s a perfect introduction that sums up what we want to know about Stripe, but the reason for writing this is to understand the exact problems they solve, and how they solve those problems, and most especially in Africa. For one, we know that Stripe is a Global payment Company that is currently supported in 46 out of the 195 countries in the world. Amongst those 46 countries, we have only 4 African Countries where stripe is supported.
Before we get into all that, let’s talk about the growth and successes of Stripe. Stripe was founded by Irish brothers, John and Patrick Collison in Palo Alto, California, in 2009, and they both serve as the president and CEO, respectively. After founding the company and going through all the technicalities that come with founding a startup, in 2011, they received a $2 million investment, which also included contributions from Elon Musk, Peter Thiel, and Irish entrepreneur Liam Casey. There were also contributions from Venture Capital firms like, Sequoia Capital, Andreessen Horowitz and SV Angel.
The problem Stripe solved was one that should have been something of the past at that time, but it was not for some reason. The little challenge: “The problem has always been the layers of intermediation,” explains Chris Higson, a professor of accounting at the London Business School. For years most small businesses and startups had to go to the banks to set up accounts, process payments and, set up a gateway for these processes, and to add to it all they had to wait weeks and pay fee after fee. Elon Musk, Peter Thiel and Max Levchin had founded PayPal in 1998, and went on to sell it to eBay. PayPal, which at the time was meant to simplify payments online, actually made it worse. PayPal had restrictions that frustrated users, which were mostly budding startups. PayPal would put startups revenue on a 21 to 60 day rolling reserve, and this meant that up to 30% of a company’s revenue could be locked up for up to 2 months. These issues with PayPal would make it difficult for developers, as they had to pick either PayPal or the Legacy systems built by banks.
After founding and selling their first company Auctomatic, a service that provides auction and marketplace management solution which in simple terms was a software-as-a-service platform for eBay power sellers to track inventory and traffic. Patrick after the period of selling the company encountered a challenge while working on other side businesses. The challenge was simply receiving payments online, and that “little” challenge made them set out on a journey to build the company we know today. Their solution was simple and their focus was on software developers. They came up with seven simple lines of code that anyone could insert into any app or website in a day to connect to a payments company. This was a way faster process compared to the weeks that it took in the banks.
After launching in San Francisco with seed funding from accelerator Y Combinator, they offered the simple seven lines of code, and developers began to integrate the Stripe API into their software and websites. In 2011, they approached PayPal founders, Peter Thiel and Elon Musk and pitched their vision to them, and they actually got funded by them. They got funded by PayPal founders, and that’s actually surprising because the same PayPal had tried to solve this same problem but could not. In short Stripe signed deals with Lyft, Facebook, DoorDash, Deliveroo, Seedrs, Monzo, The Guardian, Bohoo, Salesforce, Shopify, Indiegogo, and some other top companies. With this, you can only imagine the billions worth of dollars they process every year.
Stripe also launched Stripe Atlas platform, which is designed to help entrepreneurs start a small business from anywhere on the planet. Atlas helps people set up a company by generating the documents needed, forming your company in Delaware, hiring a registered agent, and getting a US Tax ID. This company allowed Stripe to reach a larger market of entrepreneurs from Africa, Latin America, the Middle East and parts of Asia.
Some key features of Stripe Atlas include:
- Business Incorporation: Stripe Atlas assists entrepreneurs in incorporating their businesses in the United States, even if they are located outside the country. It helps streamline the process of establishing a legal entity.
- Banking and Taxation: Stripe Atlas provides businesses with bank accounts with its banking partners. It also offers guidance on tax and legal matters to help businesses navigate the complexities of starting and running a business.
- Access to Stripe Services and Global Reach: Business owners after registration have full access to the full suite of Stripe services, including online payment processing, subscription billing, and other developer-friendly tools. They also help companies set up a structure that allows payments from customers worldwide, supporting multiple currencies.
- Investor Access: Stripe Atlas provides access to a network of investors who are interested in supporting startups.
Stripe Atlas is beneficial for startups and small businesses that want a comprehensive solution for launching and managing their online business.
Stripe In Africa
The African internet economy is expanding, with the online commerce in the region growing year after year. In other to help increase the Africa’s online GDP, Stripe entered into agreement to acquire Paystack, a technology based company in Lagos that makes it easy for organizations of all sizes to collect payments from around the world. Paystack and Stripe had been working closely together before the acquisition, as in 2018, Stripe led Paystack’s Series A financing round and has provided the company with guidance.
Over the years, Paystack has cemented itself as a growth engine for modern businesses in Africa, and with its acquisition by Stripe, they have been able to further build and scale on the continent. The synergies between Stripe and Paystack signify a positive trajectory for the digital economy in Africa. By combining forces, they aim to contribute to the ongoing evolution of online commerce on the continent, providing businesses with robust and scalable solutions for collecting payments from a global audience. As the relationship with both companies evolve, it is likely to play a crucial role in shaping the future of digital transactions and financial technology in the region.
Conclusion
In the ever-evolving scope of digital transaction, Stripe has proven that you can stand out through innovation, and transforming the way businesses manage online payments globally. The journey of this Fintech powerhouse, from its inception in Palo Alto to becoming a key player in the industry, showcases the power of simplicity and relentless focus on solving real-world problems.
For young and early startup founders in Africa, this journey is a testament to the possibilities that lie ahead. Embrace the spirit of innovation, leverage technology, and dare to dream beyond borders. Seize the opportunity, learn from the successes of these startups. The collaboration between Stripe and Paystack is a sign that the world is ready for your ideas. It is time to write your success story, embrace the future and let your entrepreneurial spirit sour.
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