Digital payments processor Stripe has announced “collaboration” with Visa following a US$5 billion dollar valuation.
The move, which will see Stripe work with the credit card giant ways to improve digital transactions, comes as Stripe secures major investment from Visa, American Express and Sequoia Capital.
The New York Times reports that while the official figure has not been disclosed, it stands at “less than US$100 million.” A considerable advance nonetheless, the paper notes, given Stripe’s US$70 million investment and US$3.5 billion valuation around six months ago.
“As Stripe thinks about the best ways to move the overall payments ecosystem forward, the biggest determinants on the financial side are the credit card networks,” Patrick Collison, co-founder and CEO of Stripe, told the publication. “We hope to continue working closely with them.”
Stripe made waves in the Bitcoin community following the rollout of its Bitcoin merchant tools in February after a year of beta testing. The latest partnerships, along with the technology’s Apple Pay and Alipay integrations, suggest a broader move to tackle the likes of PayPal, which both Stripe and Visa see as major disruptive competition.
In a discussion with analysts last week, Charles W. Scharf, chief executive of Visa, explicitly referred to PayPal’s practice of enticing customers to initiate transactions, which gain it maximum profit. “They […] have a very big business that they then use our transactions to mine from, to disintermediate our clients’ relationship with us,” he is reported to have stated.
Discussion surrounding Stripe’s latest venture meanwhile is focusing on a potential antagonism between its now somewhat sidelined Bitcoin support and its focus on a deal with the giants of fiat. Michael Moritz, a Stripe board member and partner at Sequoia Capital, even went as far as to say that the two companies were “not in competition.”
“Stripe is not competing with the card networks,” he said. “The fact that Visa has chosen to invest in Stripe, not in PayPal, is of absolutely huge significance.”
It has been noted meanwhile that while Stripe does include bitcoin as a customer payment option, merchants themselves are unable to pay subscription fees in the digital currency. These fees, as one Reddit user pointed out in light of the news, can in some cases constitute larger expenditure than Bitcoin’s own fees.