Stripe’s stronger focus on embedded finance

My updates

Hi there,

Last week, we hosted our third Embedded Finance Review event in Berlin. We had the biggest turnout so far, with almost 100 guests. Thanks to Mastercard and Swan for the sponsorship, and thanks to everybody who joined. I am looking forward to hosting more events, so please get in touch if you want to partner for event number four.

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Top Story

Stripe’s stronger focus on embedded finance

Last week, Stripe hosted it’s yearly developer conference ‘Sessions’ in San Francisco and announced a major change in its platform. Previously, customers had to use Stripe’s payment integration if they wanted to use any of the other products. With the change, this is not required anymore, and businesses can use any Stripe product even if they don’t use the payment product.

Stripe’s core business remains payment acceptance, but the product offering has grown quite a bit, especially in the past few years. The US company launched verification, invoicing, tax, and even a climate-related product, as well as card issuing, lending, and a banking-as-a-service product offering (the last two are only available in the US).

The old strategy indicated that Stripe’s core focus remained on their payment acceptance product and that the newer products, as good as they might be, should ultimately bring additional volume to this core product. With the new strategy, Stripe signifies that at least some of their new products are so good that they can compete in the open market and be attractive for companies that are not in need of a payment acceptance product.

But how does it affect their embedded finance strategy? It is a major shift for Stripe in terms of strategy and technology, so I would expect Stripe is counting on a substantial impact. But which of these products would justify this major change? Products like verification, invoicing, or tax? Maybe, but I have my doubts. But on the other hand, the card issuing, lending, and BaaS products could justify the decision.

Previously, Stripe could only sell these products to companies that were also in need of payment acceptance and, in addition, were willing to use Stripe for it as well. This reduces the number of potential customers significantly. Now, Stripe can go sell these products without having to sell the whole Stripe platform. Personally, I would assume that the card-issuing product, which is available in multiple regions, could have a strong impact.

In addition to the platform change, Stripe also announced additional updates to their embedded finance product offering, and the Stripe cofounders say they are building ’software-defined financial services’.

TechCrunch | Pymnts

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Non-financial Brand

Europe

  • Apple to open up NFC payments: Apple is likely reaching an agreement with the EU to open up access to third parties. Due to the widespread success of ApplePay, it may not have a big impact. (Link)
  • A startup from the movie industry raises €2.8 million: The vertical fintech startup FilmChain is providing collection services, real-time payments, and on-demand reporting capabilities for the movie industry. (Link)
  • PrestaShop partners with Mastercard: Merchants from France, Spain, Italy, and the United Kingdom will be the first ones to offer their customers ‘Click to Pay’, a payment solution without the need to manually enter card details or a password.(News)
  • JET expands mobile payments: The German gas station is enabling its customers to pay with various mobile apps. (News)

North America

  • One introduces BNPL service: Walmart’s majority-owned fintech startup launches a BNPL offering in 4,600 retail stores. It is one of Walmart’s objectives to create additional revenue sources with higher profit margins. (News)
  • Coupa partners with Bottomline: Coupa Pay, a unified platform for managing business payments, will leverage Bottomline's ACH offering to optimise payment stacks for customers. (News)

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Infrastructure Provider

Europe

  • Finmid raises €35 million and partners with Wolt: The German embedded lending company enables Wolt to provide a cash advance feature for its merchants. (News)
  • Monese plots break-up: The company, known for its consumer banking product targeting expats and immigrants, also offers a core banking platform service. Losses have increased, and no new funding is in sight. Monese’s investors believe that splitting the two businesses, increases the chances of success. (News)
  • Mastercard enhances fintech programmes: The changes will make it easier for fintech companies and enablers to partner with Mastercard. (News)
  • The Bank of London launches an AI code assistant: The service has been designed to handle technical queries in real-time from their API customers. It will be further developed to offer direct chat capabilities within the API documentation. (News)

North America

  • TabaPay to acquire assets of bankrupt BaaS provider Synapse: Synapse was one of the first movers in the US BaaS market and even got backing from a16z. But the company struggled for some years and is now being sold. The bankruptcy was necessary to protect TabaPay from potential lawsuits from Synapse fintech clients. (News; Blog post from Synapse founder)
  • Pipe launches an embedded lending product: The company is known for its marketplace, which enables technology companies (i.e. SaaS) to sell their future revenue. This service can now be integrated into our services, the SaaS provider Boulevard is one of the first. (News)

Asia

  • Unlimit secures a licence in India: This authorises Unlimit to operate as a payment service provider, enabling the delivery of payment services and methods. (News)
  • Credit card as a service platform in Singapore: The collaboration between DCS and E6 is a unified platform, streamlining the launch process of a new credit card, which is traditionally complex and tedious. (News)
  • Nium expands partnership with Thredd: The two companies are taking their existing partnership to the Asia Pacific (APAC) region. Nium is planning to use Thredd’s services to offer a virtual card solution. (News)

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Insightful stories

  • Compliance will define the future of payments: Thredd CEO says that companies need to refocus on compliance. (Link)
  • Embedded finance and gig economy: Six experts comment on the possible impact. (Link)
  • Railsr’s bankruptcy: Highlights and lessons learned. (Link) (From last year, but good moment to re-share.)
  • Fintech 2030 Report: Venture group Team8 predicts what won’t change, what will change, and what will change everything in fintech. (Link)