In March, we wrote about Stripe, a new payments startup cofounded by brothers Patrick Collison and John Collison. The stealthy company was tackling online business to business and business to consumer payments, and had already received $2 million in backing from a number of all-star investors including PayPal founders Peter Thiel and Elon Musk, as well as Sequoia Capital, Andreesen Horowitz and SV Angel
This week, Stripe actually launched to the public and we now have more details on how the startup plans to disrupt a space dominated by PayPal and others. Stripe, which has been in private beta, is a more developer friendly, easy to use payments platform. The platform supports Ruby, PHP, Python, you don’t need a merchant account or gateway and Stripe will handle everything, including with storing cards, subscriptions, and direct payouts to a bank account.
As the company states on its site, We believe that enabling transactions on the web is a problem rooted in code, not finance, and we want to help put more websites in business. Stripe says that its platform can be set up in minutes.
Moreover, Stripe’s APIs allow developers build their own payment forms, brand the experience and allows sites owners to stay on the site for the checkout experience, This last point is huge, because many merchants don’t want users to have to visit an outside site to checkout and perhaps drop the transaction in the process. Having control over the payment’s UI and experience is a win for any merchant, as is the ability to cut out any redirection.
In terms of security, credit cards go directly to Stripe’s secure environment, and never hits developer servers. Stripe’s processing costs are 2.9% plus $0.30 cents per successful charge, which is in line with PayPal. But this fee is for all charges (whether that be a $2 charge or a $10,000 charge) and only successful payments are charged the fees. There are no setup fees, no monthly fees, no card storage fees, and no hidden costs, says the company. Earnings are transferred to bank accounts on a 7 day rolling basis.
The design of the payments is also another aspect of the platform that the startup prides itself on. The design is brainchild of a Ludwig Pettersson, who is both a talented developer and a designer. Stripe also works with international payments, and customers can use pretty much any currency to pay. The amount will be converted to USD at prevailing exchange rates. At the moment, developers have to be based in the US to receive payments, but the startup will be expanding internationally soon.
Collison and his brother have a history of successful startups and have assembled a talented team of developers and designer from Lala, Mockingbird, Auctomatic, Cappuccino, Encyclopedia, and Observer. The Collison brothers actually sold their startup Auctomatic to Live Current Media for $5 million.
Back in March, we couldn’t couldn’t confirm the financing took place. But Patrick Collison says today that it did take place. We had also heard that Stripe was valued at around $20 million in the round. And Sequoia partner Michael Moritz is reportedly personally involved in Stripe as well. He’s not known to spend a lot of time on startups he doesn’t think will have huge exits.
The payments industry is no doubt going through major disruption right now with Square, PayPal, Google, and even credit card companies looking to be a part of this innovation. It should be interesting to see if Stripe can match the same success that Square, which launched a few years ago, has been able to see over the past year.
Collison tells me that the company will be coming out with more details on the platform soon, so stay tuned.