Asia’s fragmented digital payments market might seem a daunting challenge for online companies to expand globally, but US firm Stripe considers that a huge opportunity to grow its business in the region.
“Asia is leading the way in payments, innovation – you’ve got this perfect storm of large and relatively developed markets, with enormous waves of new customers coming online and creative payment methods,” said William Gaybrick, chief financial officer at Stripe, a San Francisco-based payments processing services provider, on the sidelines of the RISE conference in Hong Kong on Tuesday.
“Stripe exists to navigate that … to tackle that problem of increasing complexity, whether regulatory or in a competitive landscape, with a lot of payment methods.”
Founded about seven years ago, Stripe enables companies to accept payments online by integrating its payments processing software directly into their websites. That way, these companies no longer have to deal directly with banks to set up merchant accounts and accept credit card payments – a process that can be cumbersome and expensive.
Privately held Stripe, which describes itself as a payments infrastructure company, has been expanding its presence in Asia, entering markets such as Hong Kong, Singapore and Malaysia. Last year, the firm established its Asia-Pacific engineering hub in Singapore, which joins its three other hubs in Dublin, Seattle and San Francisco.
That expansion has come as more internet-based businesses are being formed in the Asia-Pacific, where digital payments systems are also becoming more popular. The region already accounted for nearly half of the US$1.9 trillion global payments market in 2017, according to an industry report published last year by management consulting firm McKinsey & Co.
Still, Stripe has estimated that only about eight per cent of global commerce happens online today because of regulatory complexity and a Byzantine global financial system, among a clutch of factors.
in Southeast Asia are already among the biggest challenges for technology start-ups hoping to expand their business beyond their home markets, according to a panel of entrepreneurs at the South China Morning Post’s China Conference in Kuala Lumpur last year.
Stripe has recently made a push to accepting offline payments through its Stripe Terminal – a point-of-sale card-reader that can be customised to accept a range of payment methods on one device.
The idea is to help online companies also build a “powerful offline experience”, while also providing merchants a unified view of how their customers are shopping both online and offline.
While that terminal is currently available in the US, Stripe plans to bring the device to Asia, Gaybrick said. The device would help unify the plethora of payment methods available in Asian markets, especially since credit card penetration is low in geographic markets like Southeast Asia.
Apart from payments processing, Stripe has also leveraged the data it has from working with merchants to provide artificial intelligence-powered analysis to help companies better understand their operations and combat payments fraud.
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Stripe, which is currently valued at US$22.5 billion after it raised US$100 million from Tiger Global Management in January, has no immediate plans to go public.
“We’re a very capital-efficient business and very happy as a private company,” said Gaybrick, who said the company did not see a need to raise funds or its profile via an initial public offering.
“Working with the Amazons, the Didis, the Spotifys, Slacks, Facebooks, Salesforce and Googles and so on – we have enough credibility as an enterprise player,” he said.