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Stripe Business Model And Revenue Model

Last updated on October 9th, 2020 at 02:09 am

Have you ever purchased any software online and made an online payment, do you know this can be very dangerous as you are giving your bank account information to a company who can misuse it or if stolen by some can also be misused.

So if you do not have trust in the company or in the payment gateway you are definitely going to hesitate to make a payment.

If you also have a product or service which you are selling online try to integrate a very trustable online payment gateway.

So here we are going to discuss a trustable payment gateway Stripe, so here we will discuss everything about the Stripe Business Model and Revenue Model.

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What is Stripe?

Stripe is a San Francisco based company which provides services to its users to make and receive payments online. It provides very simple, secure, and fast online payment services and users can also integrate their services to their website and mobile application. With their services you get fraud prevention, technical solutions, and banking infrastructure for your online payments.

It helps merchants to allow their customers to make payments with the help of their credit and debit cards.

Security Part

Stripe Security
Source – Freepik.com

This is one of the strongest parts of Stripe as all the purchase any user makes and the information they provide does not save and pass through the server of the merchant.

All the payment information of the user’s can be accessible from the stripe server only.

As the whole responsibility was taken by Stripe so it reduces the risk to almost zero for the merchant, also merchants can bill accounts but do not have access to any information.

History Of Stripe

Business Model Of Stripe
Source – Freepik.com

Two entrepreneur brothers from Ireland founded the company Stripe in the year 2010, they founded the company in Palo Alto but after two years they shifted the company to San Francisco in the year 2012.

Funding History

On August 2, 2010, they got their first funding from Y Combinator but the amount was undisclosed.

Then in the next year 2011, they raised the funding of $2 million from venture capitalists.

In their series A funding round they raised the amount $18 million from Sequoia Capital.

On July 12, 2012, in their series B funding round they raised a capital of $20 million from General Catalyst. Then in their series C funding round they raised the funding amount of $80 million from Founders Fund which raised their valuation to $1.75 billion.

Then in the second round of their series C funding, they raised an amount of $70 million where 7 different investors had taken part, and Thrive Capital was the Lead Investor and this investment increased their valuation to $3.5 billion.

On July 31, 2015, in the third round of their series C funding, they raised an amount of $100 million.

Then in their series D funding round on Nov 25, 2016, they raised an amount of $150 million where 3 investors had taken part and the lead Investor was the CapitalG and General Catalyst which made the company valuation of $9 billion.

Then they raised their next funding in the year 2018 which was their Series E funding where 5 investors had taken the part where Stripe raised an amount of $245 million and their valuation became $20 billion after the funding.

In their series F funding, only Tiger Global had taken part and invested $100 million and increased the valuation of the company to $22.5 billion.

Then in the Series G funding round raised an amount of $250 million where more than 3 investors had taken part and raised the valuation to $35 billion.

And in their last funding on April 16, 2020, which is the second round of the series G funding they raised $600 million where again more than 3 investors had taken part and raised the valuation of the company to $36 billion.

Investment of Stripe

When a company becomes big it starts acquiring or investing in other companies for the same reason other companies do like if that will grow they can multiply their investments.

So they made their first investment in the company named Monzo on 6 November 2017 and then October 8, 2018, in the second round of series E round funding they made their second investment and increased the valuation of the company to $1.27 billion from $350 million.

Again they invested around $144 million in Monzo and increased their valuation to $2.5 billion.

In 2018 they made their investment in a company which was a state-level pro-housing development.

Similarly, Stripe has invested in many different companies in their growing period and also getting good returns from their investments and their last investment was $20 million for a US-based company named fast which was an E-commerce universal checkout technology company.

How Does Stripe Work?

It gives the power to the vendors which make it very helpful to maintain all the records very significantly, in the business model of Stripe they simply help the vendor to connect their website with credit card companies and from there to direct to your account.

Primarily you can access all the information from their site about their offerings, they also provide a mobile application to the users, with their sites you can also get the answers to most of your questions.

In the Stripe business model, they mainly focus on lowering the cost with the help of their automation, and their other attractive points that attract the customers are great client support and promotions of great operations and deals.

Revenue Model Of Stripe (How Stripe Earns money)

Stripe Revenue Model

They made their revenue from the commissions for the transaction which the user made to purchase the product or services.

For single transactions they charge about $ 0.30 or 2.9% whichever is more.

If the user paid with the help of Bitcoin they charge around 0.8% 

Conclusion

So this is all about the Business model of Stripe and also the Revenue model of Stripe so if you have questions regarding the business model of Stripe you can ask in the comment section.

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