Stripe, the startup that lets app publishers, online merchants and other digital businesses include payments features via a few lines of code, is expanding in Asia. After launching in Singapore two weeks ago, the startup is now officially opening for business in Japan. And alongside the Japan launch, Stripe is also picking up a new investor: Sumitomo Mitsui Card Company, the largest credit card provider in the country, is taking a stake in the startup.
Sumitomo Mitsui and Stripe are not disclosing the amount that is getting invested, but we do know it is strategic: the companies have been partnering on the beta of Stripe’s Japan service, which started in May 2015.
Sumitomo Mitsui, which was the first partner for Visa in Japan (Visa is also a Stripe backer), is also partnering with Stripe on the full, official rollout. It’s helping specifically in areas like multicurrency acceptance: merchants and other businesses in Japan can use Stripe to sell goods in some 130 different currencies — a big advance on current offerings that are restricted to yen.
(Doing some simple calculations, I’m guessing that Sumitomo Mitsui’s investment is at least $10 million and a follow on from its previous round: Crunchbase lists $290 million in funding for Stripe, while Stripe itself, in the press release it sent me for this latest news, notes that it has raised “around $300 million” at a valuation of $5 billion, which was the same valuation it had around a funding round it announced in July 2015.)
While in beta, Stripe said its customers included airline All Nippon Airways, e-commerce platform BUYMA, event app Peatix, and SmartHR. That’s in a way a mirror of the range of companies that Stripe has picked up among its 100,000 customers to date: they include large marketplace startups like GoFundMe, through to on-demand, mobile-first businesses like Lyft and Instacart, and many more.
As with other markets, Stripe makes revenues by taking a 3.6% commission on each approved card charge in Japan; implementing its API is free.
Move slow, build things
Adding Japan brings the total number of countries where Stripe is live to 26, but this is a notable launch nevertheless. For starters, it’s a big market for Stripe to tackle: Japan is the second-largest economy in Asia (after China) in terms of GDP.
And while there are a number of other payment providers in the market — they include Rakuten (which also invests in one of Stripe’s competitors, WePay) and PayPal, among others — Stripe is including a feature that it says will be a first for merchants and other businesses in the country.
Stripe’s payment API will let businesses sell to customers in 130 different currencies — not just yen.
In the past, those companies would have had to set up separate bank accounts and business entities to process non-yen currencies, in part because “Japan’s financial infrastructure was built independently from the rest of the world and some of the mechanics have made it challenging for Japanese businesses to expand globally,” in the words of Daniel Heffernan, who heads up Stripe’s business in Japan.
“Japan has been a powerhouse in technology for decades, but bridging to the rest of the world economy is an achievement only a small percentage of companies have accomplished,” Patrick Collison, CEO of Stripe, said in a statement. “Stripe aims to empower more Japanese companies to export their creativity and ambition to the rest of the world.”
The new service in Japan will also include fraud protection and other security features; and as with other markets, Stripe will also build a larger financial services ecosystem around its basic payments service to improve its margins. Those other services include accounting, billing, security, and PCI compliance, as well as access to third-party technologies like Apple Pay and Android Pay. (Some features — like Instant Payouts, which was launched last month — are still not available outside the U.S.)
Considering that Stripe has had an office in Japan since June 2014, I asked Heffernan why it took so long to launch there.
“We try to take a thoughtful approach to international expansion. Rather than launching a one-size-fits-all product everywhere, we think about each new market from first principles, taking our time to get to know the nuances and understand the unique needs and pain points of local businesses,” he said. “This helps us address the most pressing needs of developers and offer the best possible product for a particular market.”
He added that multicurrency “is a great case in point: we built this feature from scratch for the Japanese market, which involved a considerable amount of time and work to make it available today. Multicurrency has never before been available in Japan, and we wanted to make that happen.”
Sumitomo Mitsui’s investment is also interesting because it comes on the heels of reports that the financial services company was looking to invest in more rising fintech startups.
The context here is that there weren’t many fintech investments in the country immediately prior to 2016, in part because of regulation, and in part because of cautious strategies around new financial models in the wake of disasters like the Mt Gox bitcoin exchange (which was based out of Tokyo).
To some extent, even the Stripe investment went through some reality checks, it seems: “We looked at the most sophisticated global technology companies — Facebook, Twitter, Kickstarter — and they all use Stripe to process payments,” says Hideo Shimada, Chairman of Sumitomo Mitsui Card Corporation, in a statement. “Stripe is bringing a new standard of financial and technological infrastructure to Japanese businesses and we are happy to support them.”
As for what’s next, Stripe is currently still in beta in Hong Kong, and Heffernan said the company is seeing a lot of interest in Southeast Asia from users (based in countries it currently supports), and it is “in the very early stages” of exploring the market there. “Asia will continue to be a primary focus for Stripe over the next few months,” he said.
Other investors in Stripe include Sequoia Capital, Kleiner Perkins Caufield & Byers, Visa, American Express, Peter Thiel, Max Levchin, and Elon Musk.
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