Stripe Business Model In A Nutshell

Stripe is a payment processing platform making money based on the transactions processed. Stripe charges 2.9% per successful card plus 30 cents. As a SaaS business, Stripe offers Billing (Starter and Scale), enabling customers to schedule clients’ invoicing or charging to analyze the subscription revenues. Other services also comprise Connect, Radar, Terminal, and Atlas.




Stripe is a financial services and software-as-a-service (SaaS) company headquartered in both San Francisco and Dublin, Ireland.

The company was founded in 2010 by Irish brothers Patrick and John Collison. Both were college drop-outs who received a seed investment from the start-up accelerator program Y Combinator.

In fact, the idea for Stripe was so compelling that it managed to attract $2 million in capital from one of its main competitors in PayPal.

Fundamentally, Stripe exists to remove the difficulty associated with processing online payments. This reality was highlighted for the Collison brothers when they launched their first company Auctomatic back in 2007. They noted that large companies had the capital to build their own payment systems, but smaller start-ups had to engage in lengthy and frustrating conversations with banks.

Collison would later note that “Stripe really did come about because we were really appalled by how hard it was to charge for things online”. The company is now worth about $95 billion, making it the most valuable privately-owned company in Silicon Valley.

Value Proposition:

  • Simplified Payment Processing: Stripe offers businesses a straightforward and user-friendly way to accept online payments, reducing the complexity typically associated with payment processing.
  • Flexible Integration: Stripe provides developers with tools, APIs, and documentation, enabling them to seamlessly integrate payment processing into their websites or applications.
  • Scalability: Stripe’s services are designed to accommodate businesses of all sizes, from startups to enterprises, allowing them to scale their payment operations as they grow.
  • International Reach: Stripe supports payments in multiple currencies and countries, making it suitable for businesses with global operations.

Customer Segments:

  • Diverse Businesses: Stripe caters to a wide range of businesses, including e-commerce platforms, subscription services, on-demand marketplaces, and more.
  • Developers: Stripe targets developers by offering developer-centric tools and resources to encourage adoption and integration of its payment processing services.

Distribution Strategy:

  • Online Sign-Up: Stripe’s self-service platform allows businesses to sign up online and quickly start using its payment processing solutions without the need for extensive paperwork or approval processes.
  • Developer-Focused Integration: Stripe’s distribution strategy involves catering to developers, making it easy for them to incorporate Stripe’s payment processing capabilities into their applications.

Marketing Strategy:

  • Ease of Use: Stripe emphasizes its user-friendly interface and features, making it clear that even businesses with limited technical expertise can use its services effectively.
  • Pricing Transparency: Stripe’s transparent pricing structure ensures that businesses can understand and calculate their payment processing costs upfront.
  • Educational Resources: Stripe provides educational content, such as guides, tutorials, and documentation, to help businesses and developers get the most out of its platform.
  • Developer Community: Stripe fosters a community of developers who share best practices and solutions, creating a supportive ecosystem around its services.
  • Testimonials and Case Studies: Stripe showcases success stories and testimonials from businesses that have benefited from its payment processing solutions, building trust and credibility.
  • Global Presence: Stripe’s marketing highlights its ability to facilitate payments in various countries and currencies, appealing to businesses with international operations.
  • Partnerships: Stripe collaborates with other technology companies, financial institutions, and platforms to expand its reach and offer complementary services.

Stripe revenue generation model

Stripe make money on every successful payment it processes.

It does this through multiple products and associated price packages.


The Stripe Integrated service is the most simple pay-as-you-go payment platform for businesses. To use it, the company charges 2.9% per successful card charge plus 30 cents. International cards requiring a currency conversion will attract a further 2% in fees.


Billing allows Stripe customers to schedule the invoicing or charging of clients and analyze their current subscription revenue.

Here, there are two plans:

  1. Starter – charging 0.5% for recurring charges, or invoices sent every billing cycle. Stripe also charges $7 per invoice for invoice auto-reconciliation.
  2. Scale – which charges 0.8% on recurring charges but offers free invoice auto-reconciliation and includes a connection to the NetSuite ERP finance system.


The Connect application allows sellers to partner with Stripe and add payments to their platform.

There are three Connect options, with each offering a different level of functionality:

  1. Standard – recommended for platforms to directly accept payments with account losses backed by Stripe. Free of charge.
  2. Express – suited for marketplaces who need to pay out sellers and service providers. In this case, Stripe charges 0.25% plus 25 cents for every payout sent.
  3. Custom – for those who want a flexible API to build a custom user interface. The same transaction charge of 0.25% plus 25 cents applies. There is also a $2 monthly fee per active account.


Radar is an application based on machine learning enabling customers to identify fraudulent transactions. Stripe charge 5 cents per transaction.


Stripe also sells two physical payment terminals with card readers. The cheaper of the two is $59 while the other is $299. Both attract transaction fees of 2.7% plus 5 cents.


Stripe customers can also use the platform to form a legal entity. The Atlas application helps users submit the required paperwork and informs of them important ongoing costs once the business has been incorporated.

For this service, the company charges a one-time fee of $500.

Key takeaways:

  • Stripe is a financial services and SaaS company with headquarters in both North America and Ireland. The idea for the platform arose from the difficulty start-ups faced when creating a system to accept customer payments.
  • Stripe drives revenue in multiple ways. Firstly, the company makes 2.9% plus 30 cents from every single transaction it processes. The company also makes money from its Billing and Connect products. These products help businesses schedule invoices, evaluate subscription revenue, and accept Stripe payments on their own platform.
  • Stripe also offers several ancillary services. The company sells two physical payment terminals for use in bricks-and-mortar stores. It also provides an incorporation service, helping start-up founders navigate their first few months in operation.
Value PropositionStripe offers a compelling value proposition to its users, including: – Online Payment Processing: Providing easy and secure online payment processing services. – Developer-Friendly: Offering a developer-centric platform with robust APIs and documentation. – Global Reach: Enabling businesses to accept payments globally. – Subscription Billing: Facilitating subscription billing and management. – Fraud Prevention: Implementing advanced fraud prevention measures. – Data Insights: Offering valuable data and analytics for businesses. – Customization: Allowing businesses to customize payment experiences. – Ecosystem: Integrating with a wide range of third-party services and platforms.
Core Products/ServicesStripe’s core products and services include: – Payment Processing: Providing payment processing services for online businesses. – Stripe API: Offering a suite of APIs for developers to integrate payment functionality. – Stripe Dashboard: Providing a web-based dashboard for managing payments and accounts. – Stripe Billing: Enabling subscription billing and invoicing. – Stripe Connect: Allowing businesses to create and manage online marketplaces. – Stripe Radar: Implementing machine learning-based fraud prevention. – Stripe Sigma: Offering advanced data analytics and reporting tools. – Stripe Treasury: Providing banking and financial infrastructure solutions.
Customer SegmentsStripe serves a diverse range of customer segments, including: – E-commerce Businesses: Enabling online retailers to accept payments. – SaaS Companies: Facilitating subscription billing for software-as-a-service providers. – Marketplace Operators: Supporting online marketplace platforms. – Startups: Offering easy payment integration for startups. – Enterprises: Providing scalable solutions for large enterprises. – Developers: Catering to developers looking for customizable payment solutions. – Nonprofits: Assisting nonprofits with online donation processing. – Global Businesses: Enabling businesses with international customers.
Revenue StreamsStripe generates revenue through various revenue streams: – Transaction Fees: Earning a percentage of each transaction processed through its platform. – Subscription Fees: Charging fees for Stripe Billing and other premium services. – Customization Services: Generating revenue from tailored payment solutions. – Value-Added Services: Earnings from additional services like fraud prevention. – Marketplace Fees: Charging fees for Stripe Connect and marketplace services. – Enterprise Solutions: Providing customized solutions for larger enterprises. – Stripe Capital: Earnings from small business lending services. – Banking Services: Generating revenue from financial infrastructure solutions.
Distribution StrategyStripe employs a strategic distribution strategy to reach its users and grow its platform: – Online Sign-Up: Allowing businesses to sign up for Stripe services online. – Developer Outreach: Targeting developers and startups with developer-friendly tools. – Partnerships: Collaborating with technology partners, banks, and financial institutions. – Global Expansion: Expanding its services to reach businesses around the world. – Education and Resources: Providing extensive documentation and educational resources. – Developer Communities: Building a community of developers and users. – Marketing and Branding: Promoting Stripe as a trusted payment solution. – Integration Ecosystem: Integrating with various third-party applications and platforms.

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