Payment enabler Stripe has kicked off its expansion into Asia after its service went live in Singapore today.
Stripe is officially entering Singapore today, but the service has been available in beta in the country for nearly one year. It makes sense that the U.S. company, which is valued at $5 billion and backed by the likes of Visa, has targeted Singapore first. Despite a small population of just over five million people, it is a global financial hub that is home to almost all of Southeast Asia’s key startups not to mention that it is the regional headquarters for international firms like Facebook, Twitter and Google.
And Stripe is claiming to have gotten off to a good start. The company said that two-thirds of companies backed by venture capital firms in Singapore are using its service. Some names mentioned today include Uber rival Grab, property listing firm 99.co, and Kickstarter, which recently moved into Asia.
Stripe isn’t saying too much about its specific plans for Asia going forward. It is already present in Australia — which is part of ‘Asia Pacific’ — and it is currently running betas programs in Hong Kong and Japan.
“Asia will be a prime focus for us over the coming year. We’re currently in beta in Japan and Hong Kong with plans to launch soon, and are hiring across our offices in Asia-Pacific to support our growth in the region,” a spokesperson told TechCrunch.
For all its apparent traction, Stripe does have some limitations in Asia. For one thing, credit card penetration is below 10 percent in some markets and cash remains a popular payment option, even for online goods. Stripe only caters to card owners which, for now, leaves the door open to companies like Omise, which recently raised $17.5 million, and Coda, which just raised $2 million, which enable online retailers to accept alternative payments.
Asia has vast potential, but there are many intricacies involved.
India, for example, has a population of over a billion, but digital access and online payments remain low and nascent. Google recently switched on carrier billing as a way to help many Indians pay for content, while Uber has embraced cash payments to help fulfill its potential in emerging markets.
Then there’s Southeast Asia, which has a cumulative population of over 600 million and a digital economy tipped to reach $200 billion per year by 2020. However, that potential is spread across six key countries, each of which requires a very local approach and team. It remains to be seen if Stripe will take a bite into that and challenge the local players.
For now, it looks like it is taking on more obvious countries like Japan and Hong Kong, but it may have to adjust its expectations and makes changes to its business if it wants to truly tap the potential of Asia.
Stripe does have its Atlas program that helps foreign companies register as U.S.-based entities to use its services, but that isn’t going to shift consumer trends in emerging markets, which is what is challenging the online payment industry right now.