A View from Christopher Mims
How Universal One-Click Payments Will Change Everything
Stripe presages the end of cash – or at least, never entering credit card information again.
Stripe, a startup backed by the same band of self-styled libertarian revolutionaries who founded and then cashed out of PayPal, is set to do to every transaction on the planet what one-click payments did to Apple’s App store and Amazon.com. If the company succeeds, the psychological abstraction of money at the core of the one-click impulse buy could make buying things easier than ever – maybe even too easy – and the backers of Stripe very, very rich.
Here’s how Stripe is different, according to a must-read post by Sarah Lacy at Pando Daily: acting as if it were a bank, Stripe does its own risk analysis on businesses that sign up with it, which means they can let anyone start processing payments immediately, without waiting to first get approval from the gatekeepers of the conventional financial system.
That was the original promise of PayPal, but PayPal has languished so long under the inertia of its parent company eBay that neither users or developers are particularly happy with it. After trying both PayPal and its two primary competitors on the web, BrainTree and Stripe, here’s what a developer had to say about Stripe, according to Lacy:
I’ve verified that it works, both on the backend and the frontend. I just need to make it live, have Paul test it with his credit card, get the SSL working on the server, and it will be READY.
Their API is so simple — fuck EVERYBODY else, I want to marry Stripe and have a billion of their babies.
In the real world, Stripe will be competing with Square, which is more focused on making it easy for merchants to accept the one means of payment we all carry around already – credit cards. It’s fairly obvious, however, how Stripe will connect the dots and leapfrog that modality: one click payments from the phone.
Granted, there are big players in this space already, like Google Wallet. But given Google’s abysmal batting average when it comes to the probably-still-too-numerous fields in which it plays, no one’s holding their breath for Google Wallet to break out.
Once we have a true one-click payment mechanism enabled, probably, by some one of the of Near-Field Communication standards built into our increasingly sophisticated and ubiquitous smartphones, we’re looking at the end of credit cards, at least. And possibly the end of cash, at least for everyday transactions. (Though, as I’ve written before, there are plenty of reasons cash will remain the standard for plenty of other types of transactions.)
This is such a huge potential moneymaker – Stripe charges 2.9% of every transaction plus 30 cents – that it’s a wonder no one has taken Stripe’s approach yet. Stripe seems to be succeeding because it treats the people who deal with the headaches of transaction systems – developers and project managers – as if they’re the real customers. And it’s working, as Lacy notes:
Stripe not only raised another $20 million two months ago at a reported $500 million valuation, it’s signing up big customers. Increasingly, it gets into massive companies — even ones you wouldn’t think of as particularly developer heavy– the same way it did with NSFW– developers just go nuts over it and sneak it into new projects. Like most modern enterprise software apps, Stripe then tries to expand within these customers once it has a foothold.
We’ve seen this before, with stealth invasions into corporate IT systems by iPhones, Wordpress, Google Docs and the like. Empower the workaday doers who will do anything to avoid their own corporate bureaucracy and your customer base will explode. The result could be a future in which the payment handlers aren’t branded Visa and Mastercard, but rather Stripe and Square.