Stripe with new $80 Mn Funding and $1.75 Bn Valuation, Watchout PayPal!

Payments startup Stripe raised around $80 Mn in new funding this week through investors including Khosla Ventures, Sequoia Capital, and Founders Fund. This deal brings stripes valuation to an astounding $1.75 Billion.

Stripe found and run by Limerick brothers – John and Patrick Collison - is a popular mobile payment app in the USA and Canada. Stripe has no setup fees, no monthly fees, no validation fees, no refund fees, and no card storage fees. There’s also no charge for failed payments. Stripe users pay 2.9% and 30 cents as processing fees (the same as PayPal).

The rapid growth of Stripe over the last three years has spurred talks of competition to the ageless PayPal that has dominated this space for nearly a decade. According to the company, ‘Billions of dollars a year of payments, for online businesses’ are processed through their platform. Stripe operates in 12 countries.

When you look at the [payments] industry on a macro basis, only 2 per cent of consumer spending happens online at the moment, Patrick Collison said. The new funds will help fuel Stripe's international expansion. Entering each new country required meeting local laws governing payment providers, and sometimes required Stripe to team up with existing businesses, he added.

Apart from the obvious comparisons with Braintree and Paypal, there are several other players in the space as well. ZooZ, is another company that is operating in this space. ZooZ follows a consumer driven approach, thereby concentrating on user behavior and needs, in addition to the technical aspects of payments. The company follows a pricing model of 2.8% + $0.19 per transaction, simply meaning that it doesn’t get paid unless the developer does. The platform provides payment through credit cards as well as the option to use PayPal or Dwolla and other options. The company also enables customers to use their mobile bill to make payments by providing them mobile payment service.

In a recent blog statement, Stripe had stated the possibility of its international expansion with beta services in France, Germany, Belgium, Australia. After Britain and Canada, Ireland is the third country to launch full Stripe services. The company has a long way to go to reach PayPal’s reach of 190 countries. PayPal also recently acquired Stripe’s main competitor Braintree.