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, 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’.
