The payments industry has suddenly gone from an Internet full of “1984”-like drones, all shuffling into work and installing PayPal, to a stunning time of innovation. Not only are a handful of companies gunning after various parts of the once-innovative monolith’s business, but they’re launching new features weekly.
It’s so fucking on. And it’s about time. This is great news for developers, the Web and consumers. For PayPal? It’s only good news, if it somehow spurs it into a culture change.
Not unlike Facebook connect, it does two things. It allows individual merchants on large marketplaces like Skillshare to connect via Stripe either to existing accounts or to create a new account in moments. Collison sees this as a huge potential market. “This could help every online store front, every website never have to go get a merchant account again,” he said.
Stripe Connect also allows third parties to build more robust apps for sellers using Stripe’s data. Applications could include helping merchants prepare taxes, or proving more robust analytics on sales conversions.
When Collison first started to describe Stripe Connect, I thought he was going to be launching easy-to-sign up consumer accounts that could allow people to pay across accounts. That’s a remaining advantage for PayPal. The allure of enabling one-click payments across merchants is the reason that competitor Braintree recently bought digital wallet Venmo. Since Braintree just last week announced it had retooled to compete with Stripe’s instantaneous underwriting fee, it wouldn’t have been crazy for Stripe to answer back and compete with Braintree’s latest edge.
But it’s almost more interesting that Stripe isn’t locked in a feature-by-feature war, intense as this space is. Instead the company is keeping its head down, running its own race. Stripe has always been focused on being the most developer friendly payment option, and its developers were asking for these two features, Collison says.
When I asked what the move does for Stripe strategically, he was a little flummoxed and said, strategically, it gives developers what they were asking for. “It adds a ton of value to the platform,” he says. “People like to do richer things with data. We’re not particularly hatching a diabolical plot, we just want to make these transactions better.”
A lot of this is rooted in Stripe’s corporate DNA. While Braintree draws strength from CEO Bill Ready and his team’s experience in building financial platforms, Stripe is staffed by a highly international team of people that have spent their careers working on Internet infrastructure.
Both companies see payments as the last piece of the Web infrastructure that isn’t as modern and turnkey as it should be. But Braintree sees this from the point of view of finally being able to build the financial services product the Web deserves, and Stripe sees it from the point of view of how making this piece of Internet infrastructure as seamless as the rest of the Web.
It’s a subtle difference, but one that is at the core of each of the company’s different approaches, as they gun for the same end-game. The bull-case for Braintree is it gets financial services. The bull-case for Stripe is it gets the Internet. Braintree tends to obsess about customers; Stripe obsesses about developers. It’s not a surprise one is based in Chicago and one is based in Silicon Valley. “When we were conceiving of this product, we started to think about it on the level of what makes sense for the Internet, not about how to be a payments company” Collison says. “We’re not necessarily from a financial background. We come from a background of how do we make Internet infrastructure better. Clearly payments data should not be locked up and siloed. That’s where this idea came from.”
And, honestly, I could make either bull-case. Whoever wins this multi-way battle will need an understanding of both spheres. And astoundingly, both customer service and developer relations are massive weaknesses for PayPal. At the end of the day the battle will play out around the world, as each tries to be the modern global payments standard.
Given Stripe is the one with the PayPal mafia DNA — with investments from Peter Thiel and Elon Musk — it’s interesting that this play is reminiscent of the early days of PayPal. After a floundering period when PayPal tried to find a business, eBay sellers sort of latched onto it, giving it a more clear and immediate reason to exist. PayPal and eBay had a symbiotic relationship, where eBay provided a test case for why PayPal was then so modern, and PayPal gave eBay what it’s sellers desperately needed: a way to take credit cards. And now, a big part of one of Stripe’s most important product launches to date is enabling payments on the modern interation of eBay — companies where people can create their own small businesses peddling expertise and services.
Collison says this inspiration wasn’t the impetus for Stripe Connect — it was responding to the users and trying to make transactions more data-rich. But he admits it’s an interesting coincidence.
[Disclosure: Peter Thiel is an investor in PandoDaily.]