California Start-Up Reaches out to Chinese Consumers
This week, Stripe, a mobile payment start-up from San Francisco, announced partnerships with two of China’s biggest digital payment services, Alipay and WeChat Pay. These deals will enable Stripe to reach hundreds of millions and potentially 1 billion Chinese consumers. According to Stripe’s president and co-founder, John Collison, “If you are an Internet business, this unlocks a new vast customer base.” With the right strategy, entering the Chinese market will offer companies a new level of scale.
Founded in 2010, Stripe has become one of the most valuable venture-backed financial technology companies in the world. It offers solutions that allow merchants to accept payments. Stripe has several well-known venture capitalists on its books including significant investments from Sequoia Capital, Andreessen Horowitz and Visa. Early backers included PayPal founders Elon Musk and Peter Thiel.
Stripe’s business model is straightforward: it charges a small fee on transactions processed through its platform.
The company has risen in popularity among software developers and merchants, mainly thanks to the convenience that its platform offers. Stripe initially provided point-of-sale services to small technology companies in the US, but now has customers in more than 25 countries and is also used by consumer brands such as Facebook, Target and Macy’s.
Alipay is one of Stripe’s new Asian partners and is owned by Ant Financial, an affiliate of Alibaba. Alipay is used by about half a billion Chinese shoppers. Its mobile wallet is already accepted by more than 100,000 retailers in 70 international markets. Ant Financial has been expanding beyond China, recently acquiring the US money-transfer service MoneyGram International for $1.2 billion. Earlier in 2017, it teamed up with First Data to allow its Alipay users to shop at 4 million US merchants.
WeChat Pay is owned by Tencent Holdings and has more than 600 million users. The two companies dominate the market for mobile payments in China with a combined 90 percent share. Stripe could reach a massive new audience.
Foreign companies are increasingly looking for ways to work with Chinese payment platforms in a bid to take advantage of their huge number of customers. Alibaba’s collaboration with Stripe will aid its efforts to attract more US businesses and feed Chinese consumers’ growing appetite for foreign goods. While Stripe is keen to profit from customers in China, Chinese payment companies are exploring ways to make money from international transactions. If executed correctly, this could be a win-win situation for all parties.
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