Stripe Is Now a $20B Company

People approach payments in the same way they approach, say, twitter: They think of the simplest parts of the business, and think that's all there is.

If all you are doing is taking credit card numbers, taking money out, and handing it to merchants, then sure, there's relatively little value there, and the competition at that level can be fierce.

But what you find in companies like Uber or Amazon today is not just taking credit cards: They run marketplaces where signing on is easy. They will take very different payment forms in different countries: The world is not really all about credit cards in US dollars. You need to fight different kinds of credit card fraud, build a reporting infrastructure, integrate with some traditional accounting system, and connect it all to your logistics in some fashion. A large marketplace will have dozens, if not hundreds of people dedicated to payments, and that without caring of the little bit of taking credit cards. It's in those areas where payment companies don't have feature parity, and a big part of what you'd pick one over another, especially as a startup. And in differentiation there's money, not in taking all the physical retail sales for Walmart.

I suspect that eventually a few big players will really be feature complete with each other and margins will go down, but maybe there is a big winner there, who has an expensive to replicate product, or whose product relies on so much data that competition is impossible. If that were to happen, that kind of big winner's valuation would be far higher than what we see today from Stripe, Square, Paypal or Alipay.