Mobile payments start-up Stripe's warchest grows by $91m

IN the crowded field of online payments, venture capitalists are betting Stripe is a standout worth more than a billion dollars.

IN the crowded field of online payments, venture capitalists are betting Stripe is a standout worth more than a billion dollars.

The payments start-up had raised about $US80 million ($91m) in new funding this week from venture-capital investors including Khosla Ventures, Sequoia Capital, and Founders Fund, said co-founders and brothers John and Patrick Collison. After four years, Stripe is now valued at $US1.75 billion.

The lofty valuation for such a young company suggests Stripe is growing rapidly in the area of mobile payments - a market that Forrester Research estimates will add up to $US90bn in total US spending in 2017 - and posing a threat to eBay's PayPal, the digital-payments leader for more than a decade.

The San Francisco start-up is among several companies trying to simplify how businesses accept payments online and through a mobile device. Stripe provides easy-to-use computer code that any merchant can plug into their website or mobile app to begin accepting credit card payments. The company takes 2.9 per cent of most transactions in addition to a flat commission of US30c per charge - the same rate set by PayPal.

"Payments are still startlingly disconnected and fragmented," Stripe president John Collison said. "Less than 5 per cent of consumer spending happens online today. It's pretty clearly going to be much larger than that."

The new funds will help fuel Stripe's international expansion. Now accepted in just 12 countries, Stripe has plenty of work to catch up to PayPal, which is in more than 190 countries. Entering each new country required meeting local laws governing payment providers, and sometimes required Stripe to team up with existing businesses, Mr Collison said.

While the company doesn't disclose its revenue or number of merchants, its software is now used in thousands of popular mobile apps, including ride-sharing service Lyft and grocery delivery app Instacart. Its total payment volume had doubled since last September, he said.

Stripe's transaction total is dwarfed by PayPal, which processed $US125bn in purchases last year. But according to Khosla Ventures' Keith Rabois, an early PayPal executive, Stripe has a competitive advantage because it created a simple service that is popular with developers.

"PayPal has a lot of legacy technologies cobbled together, whereas Stripe has reinvented everything they are doing from scratch," Mr Rabois said.

"Stripe has created a brand where all new developers start with the premise that Stripe is the right answer. If you were a developer today and you thought about using a different option, your engineers would think you're insane."

Stripe saved costs for Lyft, which began using the service a year ago to let drivers process mobile payments. "Stripe removed the need for us to hire additional internal staff to process payouts to Lyft drivers," said Lyft co-founder Logan Green.

For its part, PayPal stepped up competition in mobile payments last year, when it paid $US800m for Braintree, widely seen as Stripe's closest rival.

Stripe has raised more than $US120m from investors, who include Elon Musk and Peter Thiel as well as Andreessen Horowitz, Redpoint Ventures and General Catalyst Partners.