For Stripe, Asia's fragmented payments landscape is an opportunity

• Stripe is not just a payments startup, but a developer’s tool for businesses to innovate
• Aims to be the underlying infrastructure of startups serving niche markets, regions

TO say that Stripe is merely a payments platform is, at the very least, too simplifying.

For Noah Pepper, Stripe’s business lead for Asia Pacific, Stripe is a culmination of a financial platform, a business tool and – he stresses this multiple times – a developer tool: one that helps software engineers build products off the back of Stripe’s massive range of offerings.

Stripe is, truly, not just a simple payments platform. A US$600 million fundraising to date places the US-based startup at a US$95 billion valuation, making it one of the most highly-valued startups ever – more so than Elon Musk’s SpaceX, and second only to ByteDance (Musk is, notably, an early investor in Stripe).

The eyes and the deep wallets of the startup is now trained towards Asia, a region in which Pepper says they are investing “really deeply” for the past couple of years, with investments set to accelerate.

In Southeast Asia, Stripe is making its mark slowly but surely. It entered Singapore in 2016 and Malaysia in 2019, with a Thailand expansion in the works. It has already garnered a good number of partners, which include top Southeast Asian players the likes of GrabPay and notable startups like SOCAR and FashionValet.

It makes sense for Stripe to explore Southeast Asia at a comfortable pace.

The region, after all, is a highly fragmented one. Countries here have varying levels of financial advancements, and with some areas still lacking in formal banking services. Financial regulations differ wildly.

But this fragmentation, according to Pepper, is where Stripe truly thrives.

“Stripe is especially important in these markets where payment is fragmented,” he tells Digital News Asia (DNA) in an interview.

Pepper says essentially, an already fragmented payments market means an increasing number of payment options. This is an aspect that businesses won’t want to deal with, he argues.

“They don’t want to spend so much time and effort maintaining a bunch of different payment methods,” explains Pepper.

“They just want to be able to offer what their customers need. What we’re focused on is helping our customers keep pace with the changing landscape.”

Patching a fragmented region

Another interesting thing about the Asia Pacific region is its fragmentation from a geographical standpoint, Pepper says, noting that big businesses that start locally would eventually need to start selling in other countries, then across the region and internationally.

This means businesses would need to tap into the different payment methods of each country. Being in China, for instance, would require businesses to embrace Alipay and WeChat Pay.

“What often becomes hard is the 'stacking' of multiple geographies and multiple payment options,” Pepper argues.

According to him, this can prove overwhelming for businesses which are expanding online. What's more, the Covid-19 pandemic has necessitated accepting digital payments, he adds.

Untangling this mess is where Stripe comes in, both with its offerings and their ability to acclimatise to different payment options across the world, he claims.

Startups in the region are already seeing some benefits, according to Pepper.

FashionValet, which Stripe helped roll out its financial process exchange (FPX) and card payment methods for, has seen rising conversion rates, claims Pepper.

Pepper says Stripe not only helped provide a better user experience by streamlining the checkout flow, but also introduced tools to optimise card acceptance.

Additionally, FashionValet saw better productivity returns using Stripe’s dashboard tool, a user interface (UI) that helped manage payments and refunds, Pepper says.

Meanwhile, another Stripe partner, e-commerce platform Easystore, utilises Stripe’s Connect product to basically resell payments, offer payment services as part of their store-building experience.

And meal subscription startup Dahmakan partnered with Stripe to automate their recurring payments system.

Pepper says Stripe is designed for tech-forward and ambitious businesses, but what the startup wants is to serve and help are small and medium enterprises (SMEs), especially in the F&B industry.

During the Covid-19 movement control order (MCO) periods in Malaysia, Stripe assisted point of sale (POS) system platform Storehub’s pivot towards automating delivery processes for small restaurants and cafes.

Through Stripe, Storehub was able to get their first live transaction running within 15 minutes, Pepper claims.

This is where the aforementioned developer’s tool aspect of Stripe shines.

“We built up these broader offerings for startups like Storehub, which creates the tools to help other businesses get online during MCO,” Pepper says.

Key ingredients

According to Pepper, Stripe has three key facets in how they can help businesses.

“Firstly, we help people move fast. Part of that is being developer-first. Part of it is our onboarding process. Whether are you are a large enterprise looking to build online businesses or starting a new company, Stripe is the fastest way to get going with payment,” he explains.

Secondly, Pepper says Stripe offers more than just payments. Digital payments open up to more problems for businesses to tackle, such as handling refunds, accounting and managing recurring payments.

Stripe has a broader product portfolio that supports that, ranging from Connect, which enables platforms and marketplaces to accept and pay out to third parties globally; to Billing, which makes invoicing and subscriptions available to recurring revenue.

In that sense, Stripe is more of a software company, Pepper declares.

The third aspect pertains to Stripe’s own ambitions.

The company has a large regional and global footprint, and this means that local companies aiming to sell in specific markets – say, China or Japan – can tap into Stripe’s resources to ensure payments go seamlessly, Pepper says.

Stripe continues to see partnerships as the way forward, and are constantly seeking partners like Easystore, which enable businesses to transition online.

An idea that fascinates Pepper are startups that serve specific niches. He cites Squire, a US-based barbershop startup, as an example.

Squire – which is a Stripe partner – serves a very specific niche, but can potentially tap into a large untapped market of barbershops across countries and regions, Pepper says.

“More and more platforms are being created in that shape – industries that needs better tools and needs online payment. And we think Stripe can be the underlying infrastructure to do all that,” says Pepper.

Future trends

Covid-19 as a whole has been a busy period for Stripe, says Pepper.

“As a response to Covid-19, a lot of businesses have become innovative in solving problems and pivoting their business models, if not starting new companies. A lot of people sign up on Stripe in order to move their business online,” Pepper says.

He feels bullish and excited for Malaysia and Southeast Asia as a whole, observing that people are constantly inventing new business models, pivoting, and finding new products and services to build.

“Covid-19 has been a terrible tragedy, but it also caused a lot of people to figure out how to start something and innovate. There’s going to be an upside from this – enterprising taking off and building new things,” he argues.

Overall, Pepper is excited to see growing digital payments adoption from a particular group Stripe focuses on: venture-backed startups.

“We care a lot for them, because they are the most ambitious customers and they push us really hard and demands the most out of us. If we learn to serve them really well, we know we can serve the rest of the market.”

According to Pepper, Stripe has seen over half of all top-tier venture backed startups in Malaysia adopt stripe since they launched.

“Many of these folks are going to go regional and global, and we’re excited to help them scale.”

Going forward, Pepper sees the constantly-shifting landscape of payment methods as a challenge for businesses.

Looking and planning ahead will be key – something Stripe is perpetually doing.

He also sees Buy Now Pay Later (BNPL), a number of them Stripe has partnered with, and e-wallets as being the next big trends, as well as subscription-based businesses.

“At the end of the day, these changes in the landscape are happening because customers find use for it. We need to figure out how we can make it simple and fast for businesses to keep pace,” says Pepper.