Businessmodel of Stripe

Customer Segments

Stripe has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:

• Consumers: This segment consists of individuals, who can make purchases and set up recurring payments.
• Merchants: This segment consists of businesses, who can accept web and mobile payments from consumers. ### Value Proposition

Stripe offers three primary value propositions: price, accessibility, and convenience.

The company charges a flat rate for all transactions from accounts that do less than $1 million in volume a year – 2.9% plus $0.30. It does not include add-on fees such as those for failed transactions, cross-border payments, recurring payments, refunds, or American Express card usage. This feature saves customers lots of money in the long-run. PayPal, in contrast, charges many of these fees.

The company’s service is widely accessible. There are dozens of websites that allow customers to accept and manage payments with Stripe. Also, it supports over 100 currencies, as well as a variety of payment sources including Android Pay, Apple Pay, Alipay, Amex Express Checkout, and Bitcoin.

The company offers many features that make the site highly convenient to use. It enables merchants to set up an account in mere minutes, compared to days for other providers. Its API is quicker to integrate than competing offerings. It offers Stripe Checkout, a customizable offering that provides templates that customers can use to design payment forms, so they do not have to do it from scratch. At processing time it does not redirect off-site for consumers to pay. Lastly, it allows merchants to migrate their consumers’ credit card data if they decide to switch pay processors.

Channels

Stripe’s main channel is its website, through which it markets its offering and makes it available for use. It also offers a mobile app, Stripe Dashboard, through which customers can access the service; they must already have an existing account through the website.

Customer Relationships

Stripe’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The site offers a Help section with answers to numerous potential questions. That said, there is a personal assistance component as users can contact support staff through an e-mail form.

Key Activities

Stripe’s business model entails maintaining a common platform enabling transactions between two parties: merchants and consumers. The platform includes its website and mobile apps.

Key Partners

Stripe’s partners consist of the dozens of companies that enable customers to accept and manage payments using its service.

These include firms in the following areas: Accounting, Analytics, Booking & Ticketing, Card Readers & POS Systems, CRM, eCommerce, Electronic Signature, E-mail Marketing & Dunning, Financing, Form-Building & Software Tools, Fundraising & Marketplaces, Gift Certificates, Installments, Inventory Management, Invoicing, Mobile Payments, Notifications Recurring Payments, Referral Marketing, Relay, Shipping, Transaction Monitoring, and User Management.

Key Resources

Stripe’s main resource is its proprietary software platform, which connects merchants and consumers. As a relatively new startup, it depends heavily on financial resources from investors. As of 2016, it has generated $280 million in seven rounds of funding from 18 investors, who include Sequoia Capital, General Catalyst Partners, Founders Fund, and Thrive Capital.

Cost Structure

Stripe has a cost-driven structure, seeking to reduce expenses through significant automation and low-price value propositions. Its biggest cost driver is transaction expenses, which largely consist of the costs incurred to accept a customer’s funding source of payment. Other major drivers are in the areas of customer support/operations and sales/marketing.

Revenue Streams

Stripe has two revenue streams, which are as follows:

Transaction-Related Revenues: The company generates income from the following:

• Pay-As-You-Go – Fees for individual transactions, which are 2.9% plus $0.30

• ACH and Bitcoin Payments – Fees for these are 0.8% Service-Related Revenues: The company generates income from the following:

• Connect – This feature offers benefits such as support for ID verification and tax reporting; fees go up to 0.5%
• Atlas – This feature offers support for various actions, including incorporating a firm in the U.S., obtaining guidance about U.S. tax law, and accessing tools from Amazon Web Services; while not yet widely available, it will cost $500 once so