Banking as a service without being a Bank — Stripe`s Treasury
I rarely write multiple blogs about one company. Stripe is an exception. Over the past few months, I wrote about their aggressive investment activates and their innovation stack, and now about one of their latest offerings, the Stripe Treasury.
Stripe has been aggressively investing in startups — 22 and growing
The Stripe innovation stack and its 6 million Github commits
Stripe’s mission is to increase the GDP of the internet by making it easy to launch and run an online business.
Stripe has had a developer focus in payments and the Collison brothers, John and Patrick, insist that they will not be seeking a banking license, unlike several other grown-up Fintechs. The word in the market is that Stripe maybe raising more money taking its valuation from $36billion to $70billion.
Stripe Treasury, is its Banking as a service (Baas) offering for internet businesses and most appealing for marketplaces.
A merchant Baas offering without being a Bank!
In practical terms, the Stripe Treasury API allows for a seamless business account opening at any of its Bank partners. Stripe has started with Goldman Sachs and Evolve Bank (both FDIC insured) as its US bank partners and Citibank and Barclays for abroad. This means that Stripe enables a small merchant, any type of individual entrepreneur to benefit from the UX and value-add of a digital-first account opening and more. On the other end, Stripe`s bank partners benefit from a minimal customer acquisition cost and access to an overlooked by the incumbents market segment.
The value proposition of the new Stripe Treasury API goes beyond just empowering directly individual businesses or small businesses. The Shopify Balance offering from the Canadian e-commerce giant, reveals the potential of the Stripe Treasury Baas offering.
Shopify Balance will be a new business offering for Shopify merchants and it is powered by the Stripe Treasury Baas offering. The Shopify Balance offers merchants a bank account at Evolve Bancorp, a card, and a rewards program. This goes beyond the existing partnership of Stripe with Shopify, for payments processing. It means immediate access to revenue earned, which can be spent via the card or transferred.
The Shopify Balance business offering is a scalable solution for Shopify to offer financial services to its merchants.
As Ben Thomson founder of Stratechery says, Stripe isn’t simply a platform, it is a platform for platforms.
Let’s monitor the network effects of the Stripe Treasury offering.
As of now, Enlyft reports that Stripe has about 44k companies using its services and 5.8% of the online payments market. The majority of companies using Stripe are small companies with revenues below $50mil (78%). 5% are large (>$1000M) and 11% are medium-sized. Currently, most of Stripe`s clients (top three industries) are in computer software, retail, and non-profit organizations.
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