When it comes to online sharing, it's easy to exchange any number of things online—messages, documents, music, photos, videos. But not money. Accepting payments on the web is still an incredibly fragmented minefield of antiquated processes and infrastructure that vary country by country. "It's a bizarre and really astonishing Internet deficiency that we want to fix," says Patrick Collison, cofounder of payments startup Stripe. "There should be a unified economic structure for the Internet. We want to become a global payments company."
Today, Stripe took one step down that path by announcing it would be launching in Canada. The San Francisco-based company, which has already launched in the U.S., has become increasingly popular in the startup community and supports such services as Reddit and Foursquare. Stripe has also caught the attention of investors, including Sequoia Capital and General Catalyst, which recently sunk $20 million into Stripe at a reported valuation of as much as $500 million. Now Stripe is pushing beyond the Americas. "We're expanding in a number of directions simultaneously," Collison says. "We think that anybody should be able to accept payments online from any country, from any other user."
The beauty of Stripe is its dead-simple solution. Traditionally, to start accepting payments on the web, you'd have to deal with a complicated, wonky process involving merchant accounts, gateways, subscriptions, credit card storage, hidden fees—a legacy infrastructure filled with banks, regulations, compliance standards, and other headaches. Stripe aims to streamline that outmoded system. As the startup's cofounders once told me, in our profile of the young company, they intend to make accepting payments online as simple as embedding a YouTube video.
The problem, however, is that these legacy infrastructures are different from region to region. "If you're an American business today, because you're only accepting credit cards means you're only accepting payments from the minority of Internet users who have a credit card; you also can't accept payments from people in, say, Indonesia, or China, or Africa," Collison says. "There are unique regulatory requirements and nuances in every country and region, along with banking and protocol and mechanical differences. On top of that, differences in payment instruments; for example, in Holland or China, most people don't have a Visa- or MasterCard-branded credit card."
For most web businesses, as Collison explains, that means sometimes dealing with months of paperwork and red tape before being able to accept payments online. "You don't want to have to submit 13 paper forms and have to wait three weeks for a response just to set up an account in the first place," he says.
Tobias Lütke, cofounder of Canadian e-commerce company Shopify, describes the pain points of this legacy infrastructure. "The process is really complicated, requiring these security compliances and deposits that were annoying and cost us money and time," he says. "It was too hard and messy; there were too many steps. I mean, if you live on the Internet; built your business online; signed up for email at Google, for online storage, and signed your corporation pages at LegalZoom, well, all of a sudden, for a tiny payment component, someone wants to see your passport? It's very jarring."
Shopify is now adopting Stripe's platform. "Patrick and the Stripe team completely upended [the system]," Lütke says.
Stripe acknowledges that it's a far way off from solving the fragmentation of the global payments industry. "There is no silver bullet," Collison says. "It will require very careful attention on each country, and methodically bringing [our solution] around the world."
So, essentially, he's trying to become the Genghis Khan of the payments world?
"I don't know if that's the first analogy I would like to use," Collison says, laughing. "Maybe like Attila the Hun?"
[Image: Flickr user xxxtoff]