Introduction
Fintech has become an unavoidable player in online commerce, providing payment processing infrastructure to Internet businesses such as Amazon, Facebook and Shopify, but it also manages the payment processes of millions of small businesses in addition to large tech companies. Stripe was founded by a pair of Irish brothers, who with their idea could also be admitted to the club of the youngest billionaires. The product, which is popular among developers due to its simplicity, has proven to be a huge financial success and is currently considered the highest rated fintech in the United States.
How does a Stripe payment work?
To pay (whether online or physical), the customer provides their card details, which are then encrypted and entered into Stripe's system through the payment gateway. The data is then sent to the receiving bank, which processes the transaction. At this step Stripe contacts the bank as a merchant , so the customer - who only contacts the financial institution as a secondary merchant - does not need to create a merchant account, which is a rather time-consuming procedure.
The payment request is then sent via the Visa or Mastercard networks to the cardholder's bank, which accepts or rejects it. The reverse side of the message makes the same journey through the card network and the receiving bank all the way to the payment gateway, indicating to the customer and the buyer whether the transaction was successful.
Investors love it
According to Stripe's activities, it is a company that develops a digital payment infrastructure, which is primarily used by Internet companies - of different size classifications and fields of activity - to process their online payments.
Its role in online money movement makes it indispensable among Internet businesses, so the company is growing extremely fast. It is no coincidence that the company has become a popular target for investors: so far in total It has gone through 18 fundraising rounds and managed to raise $2.2 billion in capital . Among its investors are such big guns as Sequoia Capital, Andreessen Horowitz, General Catalyst and Tiger Global Management.
Like most venture capital-backed companies, Stripe does not disclose financial data, the statements but according to 2020 processed transactions worth 350 billion dollars, so if we take the average of the company's fees tailored to SME and corporate customers - i.e. approximately 2 percent per transaction - fintech's annual revenue in 2020 was around $7 billion.