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Stripe CEO: US tech companies ‘underestimate’ Asia’s potential

Written by Nikkei Asia Published on   3 mins read

Despite fintech downturn, payment giant doubles down on overseas business.

Payments giant Stripe will push its investment in Asia as it strives to capture demand in one of the world’s fastest-growing regions—one filled with markets with potential that US tech companies often fail to notice, CEO Patrick Collison said.

San Francisco- and Dublin-headquartered Stripe over the years has expanded its reach from North America and Europe to markets in Asia, Latin America and the Middle East. Collison noted a particular focus on Japan, which Stripe entered in 2016. The world’s fourth largest e-commerce market, he said, is “growing much faster than in the US.”

“I find that the culture in America, for whatever reason, in the technology industry often underestimates the size of some of these global regions and global markets,” Collison told Nikkei Asia in an online interview earlier this month.

Southeast Asia has also attracted the financial platform’s attention. E-commerce spending in the region is expected to grow 2.6 times to almost USD 180 billion by 2025, with digital payments accounting for 91% of transactions by value, according to market researcher IDC.

The payment unicorn entered Southeast Asia in earnest in 2016, when it opened in Singapore. It then crossed the maritime border into Malaysia. Nikkei understands the company will expand its presence in Thailand as early as this year.

“Given the fraction of the world’s economic activity that takes place in Asia,” the 33-year old CEO said, Stripe expects the region to become a great innovation generator during the next 20 years. “This will be a critical pillar of our business,” he said, “and it’s why we’re investing as much as we are.”

Collison declined to give a specific investment amount.

Stripe’s expansion underscores the importance that a global presence can play for a digital payment company trying to sustain growth in an undulating world. Big changes are taking place, including economies that are shrugging off the pandemic and a global tech sell-off that has cut the share prices of PayPal and Block (formerly known as Square) almost in half this year.

The decline in public market valuations has extended to private fintechs. In July, Swedish “buy now, pay later” startup Klarna shed 85% of its valuation, now at USD 6.7 billion, in a funding round. Last valued by private investors at USD 95 billion, Stripe has cut its internal valuation by 28%, according to The Wall Street Journal.

Collison declined to comment on the timing or outlook for a public listing. There had been anticipation that Stripe would list as early as last year. In the meantime, amid market volatility and recessionary pressures, Collison said Stripe “was cash flow positive last year… We don’t need to raise primary capital.”

Founded in 2010, Stripe began processing payments for startups and e-commerce companies looking to handle credit cards, bank transfers, digital wallets and other payment modes. The payment gateway receives most of its revenue from a slight cut of each transaction that it charges as a fee for use of its software.

Early customers have been mostly startups like Canada’s Shopify and ride-sharing platform Lyft. But the company has been focusing on large enterprises, with Japan’s Toyota Motor and All Nippon Airways becoming some of its latest users in Asia. Collison said the pandemic urged companies to digitize, resulting in a “big cultural change.”

With demand from large companies growing, Stripe said it processed USD 640 billion in 2021, up 60% from the year before, though it expects the pandemic-induced rush to subside in 2022 and that it “won’t match the same level of growth,” Collison said.

He added that with payment modes and networks being fragmented by country and region, “it’s important to have local development in [Asia].”

In Japan, Stripe now enables bank transfers and in-person payments, two popular transaction types in the country, through cash registers at 34,000 convenience stores.

In Southeast Asia, Stripe last year partnered with regional superapp Grab in Singapore and Malaysia, transacting GrabPay users’ online payments.

Stripe had already been pushing through Grab’s ride-hailing and food delivery payments.

Collison noted that payment methods will continue to diversify in various countries, creating a complexity that will be “challenging for merchants and businesses.”

The company will continue focusing on digital payments but expects to expand into other financial services like loans, card issuing, digital bank accounts for companies, and payouts in cryptocurrency tailored to the needs of freelancers and creators.

“We are going to see an increasing blurring,” he said, “between what you would maybe traditionally call payments and then the rest of financial services.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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