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Is Stripe’s entry to e-commerce Asia a bet on risk or return?
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Stripe, one of the world's leading digital payment players, will soon penetrate Southeast Asia and India to expand its overseas activities. Operating in 25 countries, the primary digital payments player recently raised 245 million in funds to grow to new markets internationally and gain larger customers. Stripe has recently partnered with Alipay and WeChat Pay, China's top digital payment providers, to enable merchants globally to accept payments from thousands of Chinese customers using its platform. In addition to dominating the e-commerce landscape, digital wallets are also changing how tech-savvy customers in Asia make payments in their everyday lives.

The entry of global players such as PayPal, Payoneer, and now Stripe in the Asia Pacific region validates the increasing market opportunity and evolving customer preferences. A 2017 East & Partners study shows the rise in digital payment acceptance in India, China, Malaysia, Singapore, Japan, and Indonesia, while other countries like Australia are still lagging. The entry of global players such as PayPal, Payoneer, and now Stripe in the Asia Pacific region validates the increasing market opportunity and evolving customer preferences. A 2017 East & Partners study shows the rise in digital payment acceptance in India, China, Malaysia, Singapore, Japan, and Indonesia, while other countries like Australia are still lagging. (1)

The new investment makes the company’s overall valuation of 20 billion, which is estimated, double growth from 2016, when a startup’s last valuation was 9.4 billion. The financing round was led by top investors, including Tiger Global Management, the investment capital company of Chase Coleman, along with DST Capital and Sequoia. With the rising e-commerce industry, the San Francisco-based start-overseas up’s expansion demonstrates the boom of global cross-border payment platforms. In its latest Global Payments Report, the international company Worldplay discovered that the Asia Pacific e-commerce market would rise by an average of 12 percent annually and be worth 2100 billion by 2021. The boom in online payments would potentially lead to more startups in digital payments. (2)

Established in 2010, Stripe gathered top Silicon-based companies like Uber, Google, and Spotify quickly. John Collison, the co-founder of the group, said in a statement to Reuters,

“We believe this investment will be helpful as we continue to move upmarket and serve these bigger companies.”

Stripe has recently joined in a partnership with Alipay and WeChat Pay, China’s top digital payment providers, to enable merchants globally to accept payments from thousands of Chinese customers using its platform.

Asia as Prime focus for the e-commerce business

Stripe officially entered Singapore Today, but the service has been available in beta in the region for almost a year. It makes sense that Singapore was targeted first by the U.S. company, which is estimated at 5 billion and backed by Visa’s likes. With a small population of just over five million people, it is a global financial center, home to nearly all prominent startups in Southeast Asia, not to mention the regional headquarters of multinational companies such as Facebook, Twitter, and Google. And Stripe says he’s gotten off to a great start. The company said that its service is used by two-thirds of the companies funded by venture capital companies in Singapore. Uber rival Snatch, property listing firm 99.co, and Kickstarter, which recently relocated to Asia, are some names listed Today. (3)

“In the coming year, Asia will be a prime target for us. We are now in beta with plans to launch soon in Japan and Hong Kong and are recruiting across our Asia-Pacific offices to help our development in the region,’ a spokesperson told TechCrunch. Stripe does have some drawbacks in Asia, with all its apparent momentum. For one thing, in some markets, credit card penetration is below 10 percent and cash, even for online products, remains a common payment choice. Stripe only caters to card owners who for now, leave the door open to businesses such as Omise, which recently raised 18 million, and Coda, which has just raised 2 million, allowing alternative payments to be accepted by online retailers. Asia has enormous potential, but there are many intricacies involved. (4)

Then, Southeast Asia has a combined population of over 600 million and a 200 billion annual digital economy by 2020. However, the capacity is dispersed across six major nations, each of which needs a very local approach and team. It remains to be seen if Stripe is going to take a bite and challenge the local players. For now, it looks like it is taking on more obvious countries like Japan and Hong Kong, but if it wants to exploit Asia’s potential, it will have to shift its aspirations and make adjustments to its sector.

 

Expanding into Singapore and more

On Thursday, Stripe also revealed a new fund-raising round of 245 million, which officially values the firm at 20 billion. Tiger Global Management led the funding, with DST Global and Sequoia Capital following. Stripe’s head of South-East Asia and Hong Kong, Ms. Piruze Sabuncu, said all the core Stripe functions would be included in the Singapore center. Stripe’s president and co-founder, Mr. Patrick Collison, added that the firm assumes that progress is dependent. Seventy percent of Singaporeans bought something through Stripe’s payment infrastructure in the past year, the company said. Catch, Honestbee, and CapitaLand include its Singapore customers. In 2016, Singapore was the first entry point into Asia for Stripe. (5)

Stripe CFO and Chief Product Officer Will Gaybrick says globalization is one of Stripe’s most significant themes as a business. The business remains highly optimistic about Asia and has opened a dedicated engineering center in Singapore, which now employs more than 100 employees. Gaybrick describes a “perfect storm” of trade that will soon reach the internet in the next few years and the resulting difficulties associated with handling this next surge, taking into account the rapid population growth of Asia’s emerging economies. “Today, only about half the APAC population is online. And over the next few years, you’ve got about half a billion people coming online across India and Southeast Asia,” says Gaybrick. “To serve consumers internationally, we have to be super, hyper-local. All over the area, you have payment methods cropping up. You’ve got Alipay, China-dominant WeChat Pay. In Indonesia, you have the ubiquitous GO-PAY. With Grab Financial and GrabPay, you’ve got Grab doing great stuff.

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My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

Disclaimer: The views, thoughts, and opinions expressed in the article have been curated for our audience and does not warrant a 100% accuracy. All the information mentioned in the article is subject to change according to the changing viewpoints. Feel free to reach us at [email protected] for any change or copyright issues.

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Abraham George
Abraham George
My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

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