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Stripe partners with Visa, gets funded at $5B valuation

The deal will help Stripe expand internationally, and let it compete with Square and PayPal

Financial trends and news by Steven Loeb
July 28, 2015
Short URL: http://vator.tv/n/3f23

There's been a ton of movement in the payments space lately. With Square apparently already having possibly filed to go public, Apple Pay on the rise, and PayPal having split from eBay to become its own company again, it's now up to the others in this space to step up their game, or risk being left behind.

Stripe, for one, is being proactive, forging a new partnership with a major credit card company, at the same time that that it has raised a new funding round that has given it a giant valuation. 

The payments company has forged a new partnership with Visa, in which the two will work on ways to improve digital transactions, according to a report from the New York Times on Tuesday. That means coming together to work on things like payments security, as well as software for so-called “buy buttons.”

Buy buttons have become increasingly popular, especially on social network. Both Twitter and Facebook have begun experimenting with them, as has Google, as a way to allow users to purchase items from merchants without ever having to leave the network. Stripe already counts Facebook as a customer, helping them accept credit card payments on the back end.

There is a big advantage for Stripe in this deal: by partnering with Visa, the payments company, which is currently operating in 25 countries, to expand even further internationally. That will help Stripe, which is a relatively small player in this space, compete against the likes of Square, PayPal and Braintree, not to mention those services set up by established companies, like Apple Pay.

Simply the fact that Visa decided to make this partnership at all should be seen as a giant win for Stripe, as there were plenty of other, larger, payments startups it could have chosen. The credit card companies, however, see many in the space as a threat to their bottom line.

Stripe is not competing with the card networks,” Michael Moritz, a Stripe board member and partner at Sequoia Capital, told the Times. “The fact that Visa has chosen to invest in Stripe, not in PayPal, is of absolutely huge significance.”

The partnership with Visa also comes with an investment. Stripe is not disclosing how much funding it has raised, only saying that it was “less than $100 million.” In addition to Visa, other investors included American Express, Sequoia Capital and others.

Founded in 2010, Stripe has previously raised at least $190 million, most recently a $70 million roundfrom Thrive Capital, Sequoia, General Catalyst, Founders Fund, and Khosla Ventures in December. Other previous investors include Redpoint Ventures, Andreessen Horowitz, SV Angel and Peter Thiel.

This latest round values the company at $5 billion, up from its $3.5 billion valuation from its most recent round. 

VatorNews has reached out to Stripe for confirmation of the funding and partnership. We will update this story if we learn more. 

(Image source: usa.visa.com)


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