Stripe prepares Indonesia expansion, among others

Stripe, the payments infrastructure fintech privately valued at $70 billion, is steadily growing its presence in Asia Pacific, both in terms of footprint as well as its ecosystem.

It is planning to go live in Indonesia soon by integrating local payment methods, adding the Southeast Asian giant to existing onshore businesses in Singapore, India, Thailand and Malaysia, as well as cross-border services in Hong Kong, Taiwan and mainland China.

The new market reflects both macro tailwinds in Southeast Asia, as well as the company’s making more products available in the region. Asia Pacific now accounts for about 40 percent of global GDP and is the second-biggest region for payment flows after North America.

That’s the headline numbers on which Stripe is increasing its level of investment, according to company executives who hosted DigFin at a corporate day for clients in the region.

Regional trends

Sarita Singh, regional head and managing director for Southeast Asia, India, and China (main image), says Stripe’s growth reflects that of the digital economy. She says digital output now comprises 15 percent of global GDP but is growing 2.5 faster than the physical economy.

“When people think of global trade, they think of cargo container ships, but that view is increasingly out of date,” she said. “They should think of mobiles and laptops.”

She says in 2023, Stripe’s APAC-related cross-border payment volumes grew more than 30 percent compared to 2022, with a similar bump in the number of its largest customers (defined as those which process more than $1 million via Stripe).

Regional trends are supporting digital payments, such as Asian governments’ developing domestic real-time payment systems. These schemes piggyback off bank payment rails to allow services on top, such as recurring payments. Now governments are knitting these together, with bilateral deals such as those between Singapore and Thailand paving the way for what could become a multi-market network.

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Another trend is the continuing growth in buy-now, pay-later (BNPL) services. Singh says the evidence suggests BNPL are not just replacing credit cards, but driving more sales, increasing merchant sales (and growing fintech transaction volumes). But among younger people, BNPL is becoming a more popular option than credit cards.

She also cited central-bank digital currencies as another Asian trend – although sometimes what someone omits is as important as what they add, and Singh didn’t mention stablecoins or tokenized deposits. Stripe has a nascent capability of transacting crypto but from the company’s talking points, this doesn’t seem to be its priority.

New features…

That’s not for lack of things to do: the company continues to rollout an impressive number of features. Stripe launched in the US (from Irish roots) with credit-card acceptances, but now it operates a vast network of global payments and treasury services. These include optimized checkouts and post-transaction services such as billing and fraud detection.

Some of these remain available only in the US, such as its capital and lending book. But it is bringing more features to Asia, including AI-powered tools to combat fraud.

“We serve users and merchants who want to go global,” said Eileen O’Mara, the company’s global head of commercial (pictured, below). “Merchants don’t want to have to knit together their own network of payment methods.”

The checkout suite, for example, involves lots of technical tricks in partnership with local payment partners – GrabPay, Affirm, WeChat Pay, etc – to boost online conversion of end-customer sales. For example, Stripe works with partners to make sure a customer’s profile is auto-filled, no matter what payment player they’re interfacing with.

Stripe is also bringing to Asia a service it’s had in the US that automates many financial services (billing, tax calculations, and more), while embedding them in third-party venues.

And the company is automating ways to let merchants add new payment methods to their Stripe payments service. One new tweak is to enable a merchant to run an A/B test to determine if it’s worthwhile to onboard, say, Alipay. Within the Stripe dashboard, a customer can divide its traffic between a control group and a ‘treatment’ group that includes the new payment method, and see if it increases revenues, order sizes, or conversion rates. This sort of thing saves a customer from weeks’ worth of front-end changes or coding.

Stripe is also moving into offline sales, innovating sleek new point-of-sale terminals that unify payment data with online activities.

…with more partners

Markets and products are one thing, but another emphasis from Stripe is partnerships, which may involve a revenue split.

“Global commerce is a team sport,” Singh said. Payments require a lot of overlapping partnerships that fit into Stripe’s tech stack. Therefore, more partnerships are on the way, mostly in the form of other payments businesses, to broaden Stripe’s reach for its clients.

Its partnerships are not just about using third-party rails to better support its clients. Stripe can also open its product suite to partners. For example, the company says it provides billing services to more than 300,000 companies worldwide, with fees based on usage rather than flat rates. But that is complex, requiring Stripe to access users’ real-time data across various systems that a client will use.

One appeal with partnering with Stripe is the possibility for third parties to gain access to those APIs and the flow of data. Similarly, Stripe relies on connecting with other payment companies to better calculate user tax exposures. The more Stripe can forge links with third parties, the better it can use its scale to rise above short-term competitive concerns and offer a far more comprehensive suite of services to its clients.

The power of scale

It is this scale that also makes Stripe agnostic about new payment rails or technologies that could pose a theoretical challenge, be it Southeast Asian governments connecting real-time payment systems, or the rise of stablecoin-based transfers. To Stripe they’re all just new channels waiting to be integrated.

This degree of scaling may only be possible because Stripe remains privately held. A public company’s management might well decide to slash certain features that generate fewer revenues to bump up the stock price. For now, Stripe’s fintech customer-first culture differentiates it from, say, traditional banks, whose product development tends to skew towards maximizing revenues rather than responding to customer needs.

Someday Stripe’s growth phase will flatten, but for now it still seems to have plenty of new products to devise, partnerships to seal, and new markets to enter.