Stripe is in strong position heading into 2017

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In November, online payment gateway Stripe closed a $150 million funding round, which ultimately valued the firm at $9.2 billion — a total that has nearly doubled in the past year and makes it the most valuable financial technology startup.

Despite that resounding success, Stripe has “no plans to go public in the foreseeable future,” and remains happy as a private company, according to remarks made by CFO Will Gaybrick to Business Insider. The firm doesn’t feel a need to rush, because it believes it still has a long growth runway and much upside.

Stripe will continue to capitalize as e-commerce grows.

• Online and mobile shopping is on the rise. Digital commerce is rising. BI Intelligence forecasts that US e-commerce retail sales will hit $631 billion in 2020, up from $341 billion last year. Stripe is poised to profit from that growth, because the firm takes a cut of its client sales, which means an increase in digital volume could boost its revenue, according to Business Insider.
• The firm has a long runway for client acquisitions. Stripe already counts major firms, including Lyft and Macy’s, as clients, in addition to smaller sellers. But more merchants are enabling digital sales — 89% of merchants have a website and 65% offer mobile sales, up from 76% and 25%, respectively, five years ago. As more merchants continue to enable digital channels, Stripe could be left with an opening to grab market share.

That leaves Stripe well-positioned heading into 2017. BI Intelligence forecasts that the US online processing market will increase at a five-year CAGR of 13% to hit $17.5 billion in 2020. That’s a major opportunity for Stripe as it grows and expands in the coming years, but it faces stiff competition. But the firm’s recent investments in leadership, infrastructure, and international expansion, as well as new offerings like robust fraud protection, could give it a leg up to grab some of the market.

Stripe may be poised for an excellent year, but it’s still just one piece of the larger payments ecosystem, which now includes issuers, processors, merchants, acquirers, and more.

John Heggestuen, director of research at BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.

Here are some key takeaways from the report:

• 2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
• Payments is an extremely complex industry. To understand the next big digital opportunity lies, it’s critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
• Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.

In full, the report:

• Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
• Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
• Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
• Provides charts on our latest forecasts, key company growth, survey results, and more.
• Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
2. Purchase the report and download it immediately from our research store. >> BUY THE REPORT

The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the payments ecosystem.