On July 26 Stripe announced the launch of a new card issuing product. This new product, currently available on an invitation basis, allows clients to create, distribute, and manage corporate cards. I find this product to be very interesting for several reasons. One reason is that setting up and managing corporate card programs can be very complex and time consuming. There are multiple configurations around approved merchant categories, spending controls, card activation, and billing options. If Stripe has found a way to make operating these programs easier for the companies that implement them, and/or easier for the banks that issue the cards to manage these programs, this should open the door to new markets. Previously, smaller companies might not have been interested in these programs or they might have been too small for banks to service profitably. Another reason that I find this new product interesting is that it fits in with a larger trend that I have noticed in the payments space, where the networks and issuing banks are making a concerted effort to expand into the relatively untapped market of corporate payments. Corporate payments lag far behind consumer payments when it comes to credit card adoption. Many corporates still use ACH or even paper checks to pay their suppliers. Converting these companies to card payments is a great way for the networks to expand their business and for issuing banks to increase margins. Often travel cards are used as a beachhead to enter the even large general accounts payable space. I see this new Stripe product as serving that purpose as well.
Currently, there are very few details available surrounding this product. Stripe has not yet named who the issuing bank will be for the credit product, or announced whether there is more than one. My guess is that it is Wells Fargo, given that Stripe has an existing relationship with that bank. No details have been released about the minimum number of cards required to start a program, or what the underwriting process will be. In addition, Stripe mentions the possibility of “new business models” and the ability to “run the entire card stack for a new digital bank.” Without further details, I’m not sure what Stripe means by this, but it certainly raises some intriguing questions. Namely, is Stripe attempting to get smaller banks that otherwise could not or would not offer card programs to enter this space by providing a turn key technology solution? Given that Visa is an investor in Stripe, it would make sense for Stripe to go in this direction. However, it is worth noting that this would be creating competition with Wells Fargo, one of Stripe’s existing partners.
I have reached out to Stripe for comment but have not heard back as of the time of publication. The official Stripe press release can be found here.
