Following the trend of companies that rely entirely on digital products and services, one of the biggest competitors to Paypal received a massive financial injection despite the current economic turmoil. As a highly popular online payment processor, Stripe’s cash boost signals to the industry that, although some companies will inevitably come on the chopping block, Stripe will not be one of them.
Stripe Raises $600 Million in Latest Extension
Seven years after Paypal’s first public offering in 2002, Stripe entered the scene as a viable alternative for convenient and quick online payments. Although it took some time and tweaking of their services, their continued funding shows that Stripe is favored by key big players in the investment world. Just last September, Stripe raised $250 million in a Series G round of investments.
At the moment, Stripe is valued at $36 billion. Impressive, but still a long way to go to surpass Paypal’s $102 billion. More likely, Stripe would grow as it takes a piece of that payment processing cake. It seems that the Coronavirus disruption pushed investors to pick their pony for the long run.
It stands to reason, as even after the pandemic the newly-formed habits and efficiencies of FinTech companies like Stripe will manifest in people’s lives more than ever before. Nigel Morris, the QED Investors founder, is definitely playing the long game with his statement that this latest $600 million investment represents a “one-way street”.
FinTech Startup Consolidation
Digitization of the financial sector may not come so swiftly in the form of cryptocurrencies, but it is definitely coming in the form of ousting physical contact with bank representatives and tellers. Everyone sees where this trend is heading.
Accordingly, there has been a slew of recent investments bolstering the FinTech infrastructure. This reshuffling of the FinTech startup pieces may make some companies redundant, but their inventive employees will certainly be absorbed into companies that receive the greatest investment interest. Among them are:
· SoFi – Online personal lender, investor and managing company, is in the process of buying Galileo Financial Technologies, with its finance and service tech, for $1.2 billion.
· Fast – Who pride themselves in developing the pinnacle of simplification and speed with their “1-Click Checkout” moto, raised $20 million in a funding round facilitated by Stripe.
· Finix, – Providers of the software technology that powers online payments, raised $45 million within two-month investment rounds this year.
Moreover, not only are FinTech companies seeing a rise in growth. The companies that supply them with the most vital resource of all – coders – are also benefiting. One of them is HackerRank. FinTech companies are using their platform to thoroughly test potential coding hires.
As of now, it is seeing a rise in traffic by almost 40%, as the unemployment claims of the general public reach record levels. This means that amidst the unstoppable economic shrinkage, investors are hurrying up to nurture only the potential FinTech winners. Those who are most likely to bring online financial services to the next level.
Given the rise of certain FinTech companies, do you expect to see a competitive slash of fees and other charges on online payment platforms? We want to know what you think in the comments section below.
Image courtesy of Stripe.