With a current value of approximately $65 billion and total processed payments volume of a whopping $1 trillion last year alone, Stripe continues to hold the title of the largest financial technology company still in private hands. But fintech is fragmented and a fast-moving destination, and as competition takes its place, Stripe is changing its approach.
Today Stripe announced that it will decouple payments – its crown jewel – from the rest of its financial services portfolio. That’s a big change considering that despite Stripe expanding its list of services, in the past it required companies to be payment customers in order to use the rest. Additionally, the company is adding a number of new embedded finance features as well as a new wave of AI tools.
The updates were unveiled at Sessions, Stripe’s major developer event in San Francisco, where the company said it would announce more than 50 (yes, 50) new features on 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 fuss, but in reality most new releases are incremental—updates and new features for larger products that have already been announced.
“Our mission is to increase the GDP of the Internet. Our strategy is to listen carefully to the needs of the world’s most demanding and innovative companies,” said Patrick Collison, CEO and co-founder of the company, at the event. “This year, our scale positions Stripe well to help our users navigate the increasingly complex payments landscape and leverage AI to drive growth. We’re also making Stripe more modular, so businesses can use only the parts of Stripe that are most useful to them.”
By removing the requirement to use its payments API, Stripe is creating a major barrier to customers and potential customers who may have wanted to use some of the company’s other tools – including fraud, risk and verification services, as well as billing and invoicing, personal Payments, financial account data and more – but didn’t want to miss out on Stripe’s larger platform. This represents a shift in how Stripe views its broader platform: in the past, it assumed that introducing other services could help entice users to take up its payment services; Now it appears ready to explore how it can sell some of these non-payment services itself.
In an interview, Will Gaybrick, Stripe’s chief product officer, admitted that users had been asking for the company to open its walled garden for some time, but claimed that this was one of the main reasons it was delaying it until now It’s technically difficult to create integrations for legacy services.
On another level, it highlights an interesting market shift: companies like Stripe (and many others like Adyen) have taken a platform approach to the payment services business. They aim for higher sales and margins per customer by becoming one-stop shops. However, the truth is that the market is vast and fragmented, with customers of all sizes having dozens, sometimes hundreds, of options for what they want to use.
In fact, some may want the freedom to be flexible, others may be tied to contracts, and still others, depending on the market, may simply want to work with multiple providers or reduce risk by using multiple platforms. This has clearly become a bigger opportunity for the company; So it is now opening its walled garden.
Other notable updates announced today:
Adding AI tools to checkout and fraud tools
Stripe announced a new version of its checkout experience that uses AI to give customers a more precise selection of payment options based on location and what customers may have already used. To drive personalization, the number of payment methods will be doubled to 100. These include, among others, Amazon Pay, Revolut Pay, Swish, Twint and Zip.
“What we’ve heard in the past is, hey, we need more coverage for payment methods if we want to go full 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 AI as it conducts A/B testing for the checkout flow.
When it comes to fraud, this is an area where Stripe is closely tracking market trends and we are seeing AI tools being integrated into a number of fraud detection services. In this case, the company is launching a new tool called “Radar Assistant” that allows users to create new fraud tools on the Radar Risk platform using natural language commands.
Major update to the integrated finance function
Embedded finance – where companies that may or may not focus on financial services integrate financial products into their apps and other services to improve customer loyalty, revenue and the customer experience – has become a growing area of fintech, with companies like Rapyd and Plaid , Airwallex and TrueLayer are among the dozens of companies developing and providing these tools to neobanks, other fintechs and others. Given that many “as-a-service” offerings also offer payments, it is important that Stripe continues to expand its own embedded finance efforts under the Stripe Connect brand to remain competitive.
Today a series of upgrades were announced to bring the total number of Connect tools to 17, including 10 focused on various payment services. This includes, for example, the addition of Stripe Capital to offer customers loans, it said. Gaybrick told TechCrunch that Lightspeed, the point-of-sale company, now generates 50% of its revenue from embedded financial products, so it’s an important area where Stripe needs to evolve.
Usage-based billing upgrade
Frankly, Stripe has been a bit slow to develop more sophisticated subscription and billing products, opening the door for companies like Paddle and new entrants like Lago (which focuses on open source billing) to develop significantly more differentiated offerings to address the wave new technologies and pricing of this technology in the market. This includes not only more detailed and customizable subscription models, but also the introduction of usage-based billing based on the parameters desired by customers. Now Stripe is throwing its hat into the game, announcing today that Anthropic is a prominent customer using the feature to adjust fees and billing for its API.
“For Claude Pro, we use Stripe Billing to manage subscriptions. For our API, we use Stripe Invoicing to make it easier to automate accounts receivable, collect payments, and reconcile transactions. This improves the experience for Anthropic and our customers alike,” Daniela Amodei, co-founder and president of Anthropic, said in a statement.