Stax, a payments platform that caters to businesses of various sizes, has become fintech’s latest unicorn. The company recently raised $245 million in a Series D funding round to reach a $1 billion valuation.
Based in Orlando, Florida, Stax was co-founded by siblings Suneera Madhani and Sal Rehmetullah. It’s one of the few fintechs led by a minority woman, Madhani, who serves as the CEO, while Rehmetullah is the company’s president. Stax achieved the feat against a backdrop where less than 3% of venture capital goes to minorities, and less than 1% of investment goes to businesses with women of color as CEOs.
“As a minority woman and executive in fintech, I’m no stranger to discrimination and doubt,” said Madhani in the company’s announcement. “My brother and I built this company from our parents’ home back in 2014. Since then, we’ve grown 500% in the past three years and processed more than $23 billion in payments for 22,000 businesses nationwide. We share this milestone not just with our team, but every person of color trying to hustle, build their own business and make history.”
What does Stax do?
Stax is a payment technology provider with a variety of products for businesses of all sizes. It allows merchants and SaaS companies to manage their payments ecosystem and simplify their customer experience through fully integrated solutions. The service comes with a unified dashboard where businesses can review all their accounts in one place. This includes payment statuses, sales figures, accounts payables and receivables, refunds, and disputes.
Additionally, the dashboard generates data analytics geared towards helping firms with decision-making. Users get access to sales and customer analytics to manage the health of their business, as well as merchant management, direct integrations into ecommerce solutions, and a marketplace with software integrations like HubSpot, Quickbooks Online, and Mailchimp.
The firm serves clients through two complementary services — Stax Connect and Stax Pay — to facilitate the entire payment journey, from invoicing customers to debiting the company account.
Stax Connect is a payments ecosystem with the ability to accelerate integrations, enhance user experience and monetize payments for SaaS platforms through services ranging from user enrollment to risk management. Stax Pay simplifies accepting and managing payments, eliminating the need to work with multiple vendors.
Merchants can accept card-present and card-not-present payment transactions through a range of solutions built into the service. In addition to accepting multiple payment methods including cards, ACH transfers, point of sale, and payments taken through a virtual terminal, clients also have the option to tokenize a bank card or a bank account.
Getting the business model right for SMBs
Heavily involved in the SMB market, Stax views billing as a key part of how it structures its business.
“Most merchant service providers make their services challenging to understand and as complicated as possible on purpose,” Rehmetullah told Tearsheet. “Stax brings merchants to the direct cost of processing credit cards, called interchange, through a unique subscription-style pricing model.”
Stax claims to be the only firm on the market with a subscription-based model. It offers flat-fee subscriptions for processing business payments, rather than charging a couple of percentage points on every transaction like many rivals in the industry.
Customers seem to appreciate Stax for its products, customer service, and pricing structure.
On the Trustpilot review section, the firm has a rating of 4.3 out of 5. For context, its competitor Square has a rating of 4.5, while Stripe is rated 3 stars. Net Promoter Scores in the space have traditionally been low, but Stax seems to be doing well in that area, with an NPS of 73 against Square’s 48 and Stripe’s 30.
“Our model saves business owners thousands of dollars on payment processing costs, eliminating unnecessary fees and high markups that are the hallmarks of traditional providers. We bring merchants to the true cost of processing so they can save money and focus on what matters most - growing their business,” Rehmetullah said.
Comparisons with Stripe
Stripe and Stax are often pitted against each other by analysts and customers alike. The two firms have come forth as fierce competitors for the SMB payments business in the US.
“We are often compared to Stripe and they are considered a competitor,” Rehmetullah noted. “The difference from Stax's viewpoint is our ability to help businesses of all sizes with any type of payments, as well as our culture and company values.”
Through its SaaS platform, Stax also partners with other service providers to allow them to accept payments from their clients. According to the company philosophy, accepting payments should be the easy part for businesses — something they shouldn’t worry about when running a company. To achieve this, Stax offers live support to its customers whenever they need assistance.
2021 recapped, and a look forward
Stax considers 2021 to be a “milestone” year in which it continued growing its business, completed a number of acquisitions, and won some notable awards.
For the second year in a row, Stax was named one of the Best Credit Card Processing Companies in Money Magazine’s Best Shopping list. Additionally, Forbes included the firm in America’s Best Startup Employers. Stax also made it into the Deloitte Technology Fast 500 list for the third year in a row, and its two co-founders were finalists in the Ernst & Young Entrepreneur of the Year Award.
Stax’s acquisitions in 2021 included CardX, Payment Depot and Fusebill. Rehmetullah says these acquisitions provided the firm with the capability to create new offerings, “giving a much-needed lifeline to navigate a quickly changing payments landscape.”
Stax’s most recent acquisition was of automated surcharging platform CardX. The firm seeks to combine CardX's 2,600 active customers, representing more than $1 billion in processing volume, with the Stax network.
Following the recent $245 million funding, the firm plans to grow its customer base, increase its headcount, and invest in its current team. There is also a renewed push to expand globally and integrate with more businesses.
“2022 will be an exciting year and we’re ready for continued growth. We’re also going to invest in our community through a $1 million pledge to Stax Cares and making sure that we help other women-and-minority-led companies grow as we have at Stax,” Rehmetullah said.