Wheelings & Dealings: Visa Joins Amex with Giant Investment in Payment Startup Stripe

July 28, 2015
By: Laura Stotler

Payment startup company Stripe—now valued at $5 billion—has scored a whopping round of funding, with Visa taking a major interest in the company’s technology. The exact funding amount is open to speculation.

Stripe puts the most recent funding amount at less than $100 million, with contributions from American Express (News - Alert), Sequoia Capital and Visa. The company specializes in code that enables e-commerce merchants to add credit card companies’ “buy buttons” at checkout, letting companies compete more evenly with PayPal (News - Alert).

In May, Stripe made the code work for American Express and the new alliance will give Stripe access to Visa’s giant base of customers and merchants. Stripe is expected to use the new funds to grow globally beyond the current 25 companies it is working in.

Image via Shutterstock

It is expected that Stripe will continue to get backing from the major credit card merchants, since it enables companies to directly link to their payment processing. Competitor PayPal encourages shoppers to link to their bank accounts directly, bypassing the card merchants and associated fees.

According to Patrick Collison, CEO of Stripe, the new alliance with Visa includes getting secure access to its tokenization service, which converts customers’ card information into placeholder codes that can’t be intercepted by hackers. He said Stripe will use its own tokenization techniques to handle payment data storage but didn’t rule out using Visa’s techniques for building new business.

Stripe will also work with Visa on new types of digital payment experiences, while Visa will help Stripe expand into emerging markets as part of the new funding partnership.

“If your goal is to increase the GDP of internet and roll out globally faster … the card networks are the blindingly obvious people to work with,” said Collison.




Edited by Dominick Sorrentino