Payments

Move over PayPal and Square, Stripe introduces Stripe Capital

  • Like payments firms PayPal and Square before it, Stripe enters the cash advance market.
  • Stripe Capital will lend $10,000 to $20,000 to Stripe clients.
close

Email a Friend

Move over PayPal and Square, Stripe introduces Stripe Capital

Today, Stripe launched Stripe Capital, which lends money to internet businesses running on Stripe.

The product: Stripe has been testing a cash advance product with its SMB customers for the past 12 months.

  • Access to cash is quick as Stripe doesn’t require a lengthy signup process. Funds are generally available the next day. Stripe co-founder John Collison told TechCrunch that Stripe Capital’s average loan is in the region of $10,000 to $20,000.
  • Lending decisions are algorithmic as Stripe uses business criteria like payment volume, percentage of repeat customers, payment frequency, and changes in revenue growth to determine creditworthiness.
  • Repayments come right out of revenues as businesses repay money as they make money. Loan repayment is calculated as a fixed percentage of daily sales. There are no recurring interest charges or late fees.
  • Stripe Capital is available both direct to business customers and in certain cases, like for B2B software firms or marketplaces, to the customers of Stripe customers.

A quick case study: Xirsys, a server infrastructure provider for WebRTC applications and services, needed more server capacity to meet the demand of its users.

  • Xirsys turned to Stripe to help it expand its global footprint, using Stripe Capital to set up serviers in China, India and Japan.
  • Since using Stripe Capital, Xirsys CEO and co-founder Richard Blakely, said his firm’s annual revenue has more than doubled.

SMB lending sees a new powerful competitor: Stripe’s SMB lending business enters into a market that’s been growing rapidly.

  • PayPal just surpassed $10 billion in lending to its SMB customers with an MCA and straight loan product. Amazon, Square and Shopify both offer fast-growing MCA for customers on their platforms.
  • Kind of competing but not directly: Stripe Capital is designed to provide financing for customers using Stripe’s platform. Credit checks are easier this way and the money stays in the ecosystem. So, even though theseleading payment and ecommerce firms are ramping their SMB lending practices, these are incremental loans and don’t really compete against one another.

0 comments on “Move over PayPal and Square, Stripe introduces Stripe Capital”

Outlier OpinionsMakers

Member Exclusive, Payments

Payments Briefing: Behind Papaya’s bill payment technology

  • This week, we take a look at how Papaya uses AI to simplify bill payments for consumers and merchants.
  • We also explore PayPal’s entry into the stablecoin race, and how payments are increasingly becoming “invisible”.
Ismail Umar | January 13, 2022
Payments

Marcus by Goldman Sachs adds GM as second co-branded credit card

  • GM is going all digital by partnering with Marcus by Goldman Sachs and Mastercard to launch its new rewards card and loyalty program.
  • This represents Marcus' second big retail partnership after issuing the Apple Card in 2019.
Iulia Ciutina | January 13, 2022
Member Exclusive, Payments

Payments Briefing: 8 trends that will define 2022

  • We welcome the new year with our very first weekly Payments Briefing.
  • This week, we explore the most important trends that will shape the payments industry in 2022.
Ismail Umar | January 06, 2022
Payments

Has crypto entered the mainstream?

  • 2021 was a record year for crypto in more ways than one.
  • The industry attracted more investment this year than all previous years combined.
Ismail Umar | December 28, 2021
Payments

‘BNPL fraudsters aren’t far behind’: Payments predictions for 2022 (Part 3)

  • For this series on payments predictions for the coming year, Tearsheet asked over 20 experts to share insights on upcoming payments trends in 2022.
  • Key topics covered include B2B payments, cross-border money transfers, embedded finance, on-demand pay, virtual cards, stablecoins, digital wallets, P2P payments, and more.
Ismail Umar | December 23, 2021
More Articles