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A Thing A Bigger Thing

Tuesday, September 25, 2018

Stripe advances into POS, financing

P ayments analysts are discussing Stripe's recent moves into countertop terminals and alternative financing, which some say are consistent with the company's core values and strategy. In a Sept. 18, 2018, interview with TechCrunch journalist Jason Del Ray, Stripe co-founder and CEO John Collison said the terminal is designed to unify the online and in-store customer experience.

Collison pointed out Stripe's POS solution will use pre-certified card readers manufactured by BBPOS and Verifone and has a targeted launch date of early 2019. Warby Parker and Glossier have already optioned the product, he noted; additional merchants can participate in beta testing.

Merging card-present, card-not-present

"The Stripe Terminal is a careful next evolution of their core idea: easy integration of payments into businesses," stated Michael Roberts, chief marketing and strategy officer at Bank of America Merchant Services. "They have always been focused on easy onboarding, ease of integration, and being developer friendly, and now they will apply the same concept as they extend further into the payments ecosystem."

Roberts further noted that card-not-present transactions have enhanced the customer experience over the last decade, setting new expectations for card-present transactions. Card-present transactions account for 90 percent of all U.S. transactions; Stripe's entry into the space will give them access to a larger market while placing them into direct competition with large established providers, he explained. "It'll be interesting to see how they attempt to compete with the depth and breadth currently in the marketplace, considering they're a digital player entering the card-present space for the first time," he said.

'Retail is retail'

National Retail Federation president and CEO Matthew Shay has long asserted that "retail is retail" and customer experience takes precedence over where transactions originate. In a November 2017 interview with Corrine Ruff of RetailDive, Shay said retail is "ultimately about the customer experience and how do they get more of what they want, when they want it, how they want it, at the right price, with the right selection, or with the right exclusivity or the right level of convenience."

Peter Fitzpatrick, director of market development at Agreement Express has observed that leading retail brands, including Amazon, Starbucks, Apple and Lululemon, have all invested in online and in-store infrastructure to deliver a superior customer experience. He expects to see more merchants follow suit. "I think it's likely Stripe looked for the intersection of what matters most to their customers and what they can be best at in the world," he stated. "That led them to enter the point-of-sale space, extending their simple, yet powerful, ecommerce offering into omni-commerce."

Financing in the works

TechCrunch journalist Ingrid Lunden disclosed Stripe will be offering alternative financing products under the brand name Advance. In a Sept. 24, 2018 post titled "Stripe is testing cash advances, following Square and PayPal's moves into business finance," Lunden suggested the move was a timely strategy to expand offerings and capture market share while meeting increased demand for merchant access to working capital.

"Payments — the core of Stripe's business — generally make a thin margin and require economies of scale," Lunden wrote. "Financing works on a different principle, potentially giving the company a way of making an instant return on money that it already has."

Fitzpatrick called Stripe's recent developments an evolution in strategy, from simple onboarding and integration to a new value proposition. "Onboarding got them here, but it won't keep them competitive tomorrow," he said. "From my perspective at Agreement Express, that's thought-provoking."


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